HXL

2023 Notice of Annual Meeting of Stockholders HEXCEL 75 Years Propelling Innovation for Lightweight Solutions Since 1948

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on May 4, 2023

The Annual Meeting of Stockholders of Hexcel Corporation will be held on May 4, 2023 at 10:30 a.m., eastern daylight time, for the following purposes:

This year’s meeting will again be a “virtual meeting” of stockholders. You will be able to attend the meeting, vote, and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/HXL2023. To participate in the annual meeting, you will need the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, the proxy card or the voting instruction card mailed to you. Online check-in will begin at 10:15 a.m., eastern daylight time. Please allow time for the online check-in procedures.

As permitted by the rules of the Securities and Exchange Commission, we are also pleased to be furnishing our proxy materials to stockholders primarily over the Internet. We believe this process expedites stockholders’ receipt of the materials, lowers the cost of our meeting, and conserves natural resources. On or about March 23, 2023, we will mail to our stockholders (other than those who previously requested electronic delivery or a printed copy of our proxy materials) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials and vote online. Such notice is not a proxy card and cannot be used to vote your shares. The notice will also include instructions on how you can receive a paper copy of the proxy materials.

The Board of Directors has fixed the close of business on March 10, 2023, as the record date for determination of the stockholders entitled to vote at the meeting or any adjournments or postponements thereof.

By order of the Board of Directors

Gail E. Lehman

Executive Vice President, General Counsel and Secretary

Dated: March 23, 2023

YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO VOTE BY PROXY BY CASTING YOUR VOTE THROUGH THE INTERNET, BY TELEPHONE, OR BY MAIL, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE.

IMPORTANT NOTICE REGARDING THE

AVAILABILITY OF PROXY MATERIALS FOR THE

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 4, 2023

The proxy statement, annual report to stockholders and related materials are available at www.proxyvote.com.

2023 Proxy Statement

 

TABLE OF CONTENTS

				HEXCEL CORPORATION

 

This proxy statement is furnished to the holders of common stock of Hexcel Corporation (“Hexcel,” the “company,” “we,” “us” or “our”) in connection with the solicitation of proxies by Hexcel on behalf of the Board of Directors of the company (the “board of directors” or the “board”) for use at the Annual Meeting of Stockholders, or any adjournments or postponements thereof, to be held on May 4, 2023 (the “Annual Meeting”). The proxy materials, including this proxy statement, our annual report to stockholders, and form of proxy card, or the Notice of Internet Availability of Proxy Materials (the “Notice”), are first being distributed or made available to stockholders on or about March 23, 2023.

This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our sustainability goals, targets, commitments, plans and strategies. These statements involve risks and uncertainties and are based on current expectations, are inherently uncertain and are subject to changing assumptions. Actual results could differ materially from any future results expressed or implied by the forward-looking statements for a variety of reasons, including due to the risks and uncertainties that are discussed in our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We do not undertake any obligation to update our forward-looking statements to reflect future events or circumstances, except as otherwise required by law. No assurance can be given that any plan, initiative, projection, goal, target, commitment, expectation, or prospect set forth in this proxy statement can or will be achieved. Inclusion of information in this proxy statement is not an indication that the subject or information is material to our business or operating results.

Although we include references to our website throughout this proxy statement, information contained on or accessible through our website, including any reports, is not a part of, and is not incorporated by reference into, this proxy statement or any other report or document we file with the Securities and Exchange Commission (the “SEC”). Any reference to our website throughout this proxy statement is intended to be an inactive textual reference only.

2023 Proxy Statement

 

COMMITMENT TO SUSTAINABILITY

WHO WE ARE

OUR COMMITMENT TO SUSTAINABILITY

Hexcel is leading the transition to more lightweight, fuel-efficient transportation. Lighter yet stronger than any comparable material in the world, Hexcel advanced composites are turning the dream of cleaner, efficient, and more sustainable flight and transportation into reality today. We are committed to conducting our business in a safe, environmentally responsible, and sustainable manner where our innovation helps our customers reduce energy use, lower lifecycle operational costs and improve lifecycle efficiency.

Board Oversight of Sustainability

Our board oversees management’s efforts to integrate sustainability principles into Hexcel’s business strategy in ways that optimize opportunities to make positive impacts while advancing long-term financial and sustainability goals. Our nominating, governance and sustainability committee assists the board in its sustainability oversight responsibility by regularly reviewing the company’s sustainability strategy, including initiatives, goals, policies and disclosures in the company’s key areas of focus.

We maintain an employee sustainability strategy team, led by our Executive Vice President, General Counsel and Secretary, which includes cross-functional and business leadership. The sustainability strategy team, overseen by senior executive leadership, is responsible for leading our sustainability strategy and monitoring our sustainability initiatives, goals, policies and disclosures.

Sustainability Topic Assessment

Given the strategic importance of sustainability to Hexcel, our senior executive leadership is tasked by the board with driving results in our key areas of focus. In 2022, with the assistance of outside sustainability experts, we performed an assessment to rank the importance of key sustainability topics, by collecting the views of our internal and external stakeholders. We are using this assessment to further inform our strategic direction and priorities and to ensure we report on the issues that are most important to our stakeholders. The four key areas of focus for our sustainability program and strategy align with the Hexcel Values and are listed below, along with each sustainability topic assessed.

i				HEXCEL CORPORATION

 

COMMITMENT TO SUSTAINABILITY

				Innovating for the Future

We make products using lighter weight materials that result in less fuel consumption and thereby less environmental impact without sacrificing toughness, strength, or durability. A significant portion of our Research & Technology investment supports developing product technologies to further advance the sustainability initiatives of our customers, by increasing lightweighting and reducing the impact to the environment. We are also actively pursuing the substitution of raw materials where possible with sustainable sources. Finally, we are continuing to collaborate with recyclers globally to reduce the amount of material that goes to landfill to support our 2030 waste reduction goal.

 

				Caring for People

Protecting the health and safety of our workers is a top priority, and we are committed to providing a safe working environment. We use worker inputs, incident data and trends, and leading indicators to create systemic improvement plans to reduce hazardous conditions and at-risk behaviors. We also utilize employee feedback to best serve our workforce. Members of our human resources department regularly review benefits to ensure we are supporting the well-being of our employees and their families.

We believe in upholding human rights principles and observing fair labor practices within our organization and within our supply chain. Our Code of Business Conduct includes a requirement to comply with all applicable laws where Hexcel does business. We also require 100% of our key suppliers to commit, through our Supplier Code of Conduct, to comply with all applicable laws where they do business, including laws related to equal opportunity and non-discrimination, and laws prohibiting forced labor, human trafficking and slavery.

We embrace diversity, equity & inclusion (DEI), which we believe fosters innovation through new ideas and perspectives. We have committed to sourcing from diverse slates for 100% of our external salaried positions, including executive management and board of director level appointments. We engage in efforts aimed at hiring diverse talent, including targeted university recruitment and attendance at conferences promoting racial and gender diversity in engineering. We have also implemented policies and training focused on non-discrimination and harassment prevention.

 

				Doing the Right Thing with Transparency

Responsible governance is the cornerstone of everything we do at Hexcel. We have implemented a robust ethics and compliance program overseen by our board of directors to ensure compliance with applicable laws and regulations governing ethical business practices. Hexcel’s Code of Business Conduct establishes a comprehensive framework for compliance to promote accountability, and 100% of Hexcel’s officers, directors and salaried employees are required to certify compliance with the Code of Business Conduct annually. In 2022, reflecting a commitment to continuous improvement, we conducted company-wide ethics and compliance training and solicited feedback related to our culture of compliance using an anonymous survey at the conclusion of the training.

Our accounting, financial, and information technology reporting functions are subject to rigorous controls and audits, and the board of directors actively oversees our enterprise risk management practices. Under this process, our Chief Financial Officer and Chief Accounting Officer coordinate with subject matter experts throughout the business to identify, monitor and mitigate material risks, regularly reporting the results to our board.

At Hexcel, we are committed to the security of our products and services, the protection of employee, customer and Hexcel data and the safeguarding of our manufacturing capability. We leverage the latest encryption configurations and cybertechnologies, and continuously monitor and audit our information technology and data

assets to detect any anomalies and to respond quickly to threats that may arise. Our senior executive leadership are directly involved through a formalized response team that regularly participates in tabletop exercises simulating cyberattacks. Our board actively oversees our cybersecurity practices, with our Chief Information Officer regularly reporting directly to our board.

We also advanced our supply chain integrity efforts in 2022 by conducting sustainability surveys and various risk assessments with our top global suppliers. Further, we enhanced our Supplier Code of Conduct to include additional sustainability and cybersecurity requirements.

 

				Stewarding Resources Responsibly

We believe it is of utmost importance to address environmental challenges based on data-driven scientific criteria. As a result, we regularly evaluate waste and emissions data and implement projects to work toward achieving our 2030 greenhouse gas emissions reduction goal, including: instituting on-site renewable power generation where possible, such as solar projects at our manufacturing sites in Neumarkt, Austria, Casa Grande, Arizona, and Casablanca, Morocco; optimizing our processes through third party energy assessments; retrofitting existing facilities with low-energy LED lighting and installing energy efficient equipment and systems throughout our sites; utilizing LEED (green building) guidelines for new building design; and pursuing ISO 50001 (Energy Standard) and ISO 14001 (Environmental Management) certifications.

We also focus on process improvements to facilitate standardization and efficient production, which reduces material consumption and waste, and have undertaken a number of other initiatives to encourage environmentally friendly work practices, such as recycling and reuse.

Our recent achievements in environmental stewardship include:

 

∎  Sustainability Award from Airbus Defence and Space for a new composites recycling partnership   ∎  MSCI upgrade to AA from A, with our issuance of 2030 sustainability goals a key contributor   ∎  Submitted first complete CDP Climate Change report, receiving a “C” rating

Furthermore, we recognize our responsibility to help make the world a better place for us all through both charitable giving and volunteerism. Our Hexcel Foundation is committed to investing in local communities around the world by supporting organizations with a global focus on STEM education, health, hunger and homelessness. In 2022, the Hexcel Foundation made grants to: the Smithsonian National Air and Space Museum for its STEM in 30 program, connecting middle-school students with content that shows how science extends into real life; the Cancer Research Institute, which funds promising clinical and laboratory research to fight cancer through immunotherapies; and the Children’s Feeding Initiative, sponsored by Convoy of Hope, which provides meals and monitors the health of children in countries around the world.

Our grants to these organizations were 10% higher in 2022 compared to 2021, reflecting the company’s commitment to strong communities as part of our 2030 sustainability goals. Local Hexcel sites made additional charitable donations, sponsored events and fundraisers, participated in numerous philanthropic activities, and donated thousands of volunteer hours to support their communities.

 

We are committed to continued transparency related to sustainability matters. In 2023, we are developing a sustainability dashboard to report progress against our 2030 sustainability goals and expect to provide disclosures aligning with one or more recognized disclosure frameworks. For more information, please visit our website: www.hexcel.com/sustainability/

2023 Proxy Statement					ii

 

2023 PROXY STATEMENT SUMMARY

2023 PROXY STATEMENT

This summary highlights selected information contained in this proxy statement. Please read the entire proxy statement carefully before voting your shares.

The Meeting

Proposal and Board Recommendations

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2023 PROXY STATEMENT SUMMARY

Board Nominees

* Chairman and CEO        **Lead Director

Board Diversity

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2023 PROXY STATEMENT SUMMARY

C = Chair

Corporate Governance Highlights

We believe that our corporate governance practices generally reflect best practices consistent with Hexcel’s and our stockholders’ interests. Key features of our corporate governance practices include:

Stock Ownership

ANNUAL BASE SALARY/CASH RETAINER FEE

v				HEXCEL CORPORATION

 

2023 PROXY STATEMENT SUMMARY

Executive Compensation Highlights

Our compensation philosophy is to deliver pay for performance that is aligned with stockholders’ interests, and we follow a number of compensation practices designed to provide a level of performance that creates sustainable value for our stockholders.

				Annual Say-on-Pay vote				Clawback policy for executive officer incentive-based compensation
				Pay for performance – 84% of target CEO pay in 2022 was variable and at risk				No excise tax gross-up under severance agreements or under our Executive Severance Policy
				Challenging performance targets under short-term and long-term incentive programs				No repricing of any stock options, including underwater stock options, without stockholder approval
				Multi-year vesting period for equity incentive awards				No dividends on performance share awards or restricted stock units unless performance goals or time-based vesting conditions are met
				Caps on incentive payouts				No pledging, hedging or short selling by our directors or by any Hexcel employee, including executive officers
				Robust stock ownership guidelines – 6x base salary for CEO				No excessive executive perquisites

Stockholder Engagement and Returning to Traditional Compensation Practices

In the spring of 2022 and again in the fall of 2022, in response to the low Say-on-Pay support at the 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”), the chair of our compensation committee and certain senior executives engaged with a significant number of our stockholders on various topics, including executive compensation.

Spring 2022 Outreach 75% of our outstanding shares

Stockholders representing 44% of our outstanding shares elected to meet with management, including each of our top 5 largest institutional investors

Fall 2022 Outreach 73% of our outstanding shares

Stockholders representing 36% of our outstanding shares elected to meet with management, including 4 of our top 5 largest institutional investors, with stockholders representing 26% of our outstanding shares confirming no call was necessary

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2023 PROXY STATEMENT SUMMARY

QUESTIONS AND ANSWERS

vii				HEXCEL CORPORATION

 

2023 PROXY STATEMENT SUMMARY

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2023 PROXY STATEMENT SUMMARY

ix				HEXCEL CORPORATION

 

2023 PROXY STATEMENT SUMMARY

The following table indicates the vote required for approval of each matter to be presented to the stockholders at the Annual Meeting and the effect of abstentions and broker non-votes.

2023 Proxy Statement					x

 

2023 PROXY STATEMENT SUMMARY

xi				HEXCEL CORPORATION

 

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

At the Annual Meeting, eight directors will be elected to hold office until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified. All nominees identified in this proxy statement for election to the board are currently serving as directors of the company.

Majority Voting Standard for Election of Directors

Our Bylaws provide for a majority voting standard for the election of directors in uncontested elections. Under this standard, which will apply to the election of directors at the Annual Meeting, a director nominee will be elected only if the number of votes cast “for” that nominee exceeds the number of votes cast “against” that nominee. Broker non-votes and abstentions will have no effect on the outcome of the vote. If a nominee who currently is serving as a director is not elected or reelected, Delaware law provides that the director will continue to serve on the board. However, each incumbent director nominee standing for election or reelection must submit an irrevocable resignation in advance of the stockholder vote regarding the election of directors. The resignation is contingent upon both the director not receiving the required vote for election or reelection and the board’s acceptance of the resignation, which the board, in its discretion and in accordance with the procedures described below, may reject if it deems such rejection to be in the best interests of the company.

Prior to the board’s determination to accept or reject a resignation, the nominating, governance and sustainability committee, composed entirely of independent directors, will make a recommendation to the board with respect to the tendered resignation. The board will take action on the committee’s recommendation within 90 days following the meeting at which the election of directors occurred. An incumbent director whose resignation is the subject of the board’s determination is not permitted to participate in the deliberations or votes of the committee or the board regarding the resignation.

In the case of contested elections (a situation in which the number of nominees exceeds the number of directors to be elected, which is not the case with respect to the election of directors at the Annual Meeting), a plurality voting standard will apply, and the directors with the highest number of “for” votes will be elected.

2023 Proxy Statement					1

 

PROPOSAL 1—ELECTION OF DIRECTORS

Information Regarding the Directors

All of our current directors have been nominated for reelection to the board. In connection with its determination that our current directors should continue to serve on our board, the nominating, governance and sustainability committee considered, among other factors, certain key attributes, experience, qualifications and skills that the board considers valuable to ensure effective oversight of the company, which we refer to as “core competencies.” These core competencies are defined in the chart below and listed in each director’s biography, as applicable. In addition to the core competencies, the nominating, governance and sustainability committee also considered the experience of certain directors in financing, mergers and acquisitions, investor relations, risk management and compliance, and other relevant areas related to issues we face on a recurring basis; collegiality and the ability to work together as a group; outstanding integrity and business judgment; and the ability to ask probing questions during board discussions and to carefully scrutinize significant business and other proposals suggested by management. The following chart summarizes the core competencies and illustrates how the current directors collectively represent these core competencies. These indicators are intended to be a high-level summary of what the board views as the core competencies and are not a comprehensive list of each director’s skills or contributions to the board.

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PROPOSAL 1—ELECTION OF DIRECTORS

NICK L. STANAGE
		Chairman, Chief Executive Officer and President Hexcel Corporation Age: 64 Director Since: 2013
Core Competencies:

Career Highlights:

Other Current Public Company Directorships:

JEFFREY C. CAMPBELL
		Vice Chairman and Chief Financial Officer American Express Company Age: 62 Director Since: 2003 (Lead Director since 2018) Committees: Audit (Chair); Nominating, Governance and Sustainability
Core Competencies:

Career Highlights:

Other Current Public Company Directorships:

2023 Proxy Statement					3

 

PROPOSAL 1—ELECTION OF DIRECTORS

CYNTHIA M. EGNOTOVICH
		Retired President, Aerospace Systems Customer Service United Technologies Corporation Age: 65 Director Since: 2015 Committees: Audit; Nominating, Governance and Sustainability (Chair)
Core Competencies:

Career Highlights:

Other Current Public Company Directorships:

Former Public Company Directorships:

THOMAS A. GENDRON
		Retired Chairman, Chief Executive Officer and President Woodward, Inc. Age: 62 Director Since: 2010 Committees: Compensation
Core Competencies:

Career Highlights:

Former Public Company Directorships:

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PROPOSAL 1—ELECTION OF DIRECTORS

DR. JEFFREY A. GRAVES
		Chief Executive Officer and President 3D Systems Corporation Age: 61 Director Since: 2007 Committees: Compensation; Nominating, Governance and Sustainability
Core Competencies:

Career Highlights:

Other Current Public Company Directorships:

Former Public Company Directorships:

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PROPOSAL 1—ELECTION OF DIRECTORS

GUY C. HACHEY
		Retired President and Chief Operating Officer Bombardier Aerospace, Inc. Age: 67 Director Since: 2014 Committees: Compensation (Chair)
Core Competencies:

Career Highlights:

Former Public Company Directorships:

DR. MARILYN L. MINUS
		Chair of the Department of Mechanical and Industrial Engineering Northeastern University Age: 45 Director Since: 2020 Committees: Nominating, Governance and Sustainability
Core Competencies:

Career Highlights:

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PROPOSAL 1—ELECTION OF DIRECTORS

CATHERINE A. SUEVER
		Retired Executive Vice President – Finance and Administration and Chief Financial Officer Parker-Hannifin Corporation Age: 64 Director Since: 2018 Committees: Audit
Core Competencies:

Career Highlights:

Other Current Public Company Directorships:

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PROPOSAL 1—ELECTION OF DIRECTORS

Independence of Directors

Our board has affirmatively determined that each current member of our board of directors is independent within the meaning of the listing standards of the NYSE, other than Mr. Stanage, our Chairman of the Board, Chief Executive Officer and President. In addition, the board has determined that the members of the audit committee, compensation committee and nominating, governance and sustainability committee are, and were during the year ended December 31, 2022, independent within the meaning of the NYSE listing standards, including the additional independence requirements of the NYSE applicable to audit committee and compensation committee members. In making its independence determinations, the board considered the following: Mr. Campbell is a non-employee director of a company that provides consulting services to us; Ms. Egnotovich is a non-employee director of a company that was, during 2021, a customer of ours; and Mr. Hachey was, during 2022, a non-employee director of a company that is both a customer and a supplier of ours. After considering, among other things, purchases by each company that is a customer as a percentage of our total sales, our purchases (if any) of goods or services from each company that is a supplier or service provider as a percentage of such company’s total sales, and that Mr. Campbell, Ms. Egnotovich and Mr. Hachey were not employed by the companies referenced above, the board concluded that our relationships with these companies do not impair Mr. Campbell’s, Ms. Egnotovich’s or Mr. Hachey’s independence.

Board Service

Director Tenure

The company has a majority voting standard for the election of directors, as described above under “Majority Voting Standard for Election of Directors.”

Our corporate governance guidelines also provide that the nominating, governance and sustainability committee is required to consider the previously tendered resignation of any non-employee director who retires, changes his or her employer or experiences a significant reduction in his or her professional or employment responsibilities, and recommend to the board whether to accept such resignation. The board, on the recommendation of the committee, may decline to accept any such resignation. During 2022, the previously tendered resignation of Mr. Gendron was considered under this policy upon his retirement from Woodward, Inc. On April 27, 2022, upon the recommendation of the nominating, governance and sustainability committee, and after considering factors relevant to Mr. Gendron’s continued service on the board, the board rejected Mr. Gendron’s previously tendered resignation.

Our corporate governance guidelines require employee directors to resign from the board at the time when they are no longer employed by the company. In addition, it is the general policy of the company that no director having attained the age of 70 years shall be nominated for reelection or reappointment to the board.

Director Overboarding Policy

Pursuant to our corporate governance guidelines, directors may not serve on a total of more than four public company boards, and no director who serves as chief executive officer of a public company may serve on a total of more than three public company boards (including the board of the company of which such director is the chief executive officer). All of our current directors comply with our overboarding policy. However, we are aware that some of our stockholders have their own board membership policies that are more restrictive than our policy. When a director joins our board and during the peer evaluation process, which most recently took place in 2021 and will occur again in 2023, we ensure that each director has sufficient time to be a productive member of our board and has exhibited this capacity through his or her contributions to board discussions and decision-making. Our board believes that the above policy strikes the right balance by allowing for the experience gained through membership on other boards and the time commitment needed for engaged board service.

Meetings and Standing Committees of the Board of Directors

General

During 2022, there were seven meetings of the board, and 15 meetings in the aggregate of the three standing committees of the board. Each of the incumbent directors attended or participated in at least 75% of the aggregate number of board meetings and applicable committee meetings held during 2022. A director is expected to regularly attend and participate in meetings of the board and of the committees on which the director serves, and to attend the annual meeting of stockholders, pursuant to the company’s corporate governance guidelines. Each of our directors attended the last annual meeting of stockholders.

During 2022, the board had the following standing committees: audit committee; compensation committee; and nominating, governance and sustainability committee. The board may establish other special or standing committees from time to time. Members

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PROPOSAL 1—ELECTION OF DIRECTORS

of committees serve at the discretion of the board. Each of the three standing committees operates under a charter which is reviewed at least annually by the relevant committee and approved by the board. The charter for each committee requires that all members be independent, as required by NYSE listing standards. Our board has also adopted corporate governance guidelines. All committee charters and the corporate governance guidelines are available through the Investor Relations section of our website, www.hexcel.com, under “Governance.” You may obtain a copy of any of these documents, free of charge, by directing your request to Hexcel Corporation, Attention: Vice President, Investor Relations, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, Connecticut 06901, or by email to InvestorRelations@Hexcel.com.

The following table provides information regarding the current membership of each standing board committee and the number of meetings held during fiscal year 2022:

Audit Committee

The audit committee assists the board in its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications, independence and performance, and our internal audit function. Additional information regarding the audit committee, including additional detail about the functions performed by the audit committee, is set forth in the Audit Committee Report included on page 70 of this proxy statement.

All members of our audit committee meet the financial literacy requirements of the NYSE. In addition, our board has determined that Jeffrey C. Campbell and Catherine A. Suever are each an “audit committee financial expert” under SEC rules.

The audit committee has adopted procedures for the receipt, retention and handling of complaints regarding accounting, internal controls and auditing matters by employees, stockholders or other persons. Any person with such a complaint should report it to the board as set forth under “Contacting the Board” on page 14. The audit committee has also adopted procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

Nominating, Governance and Sustainability Committee

The nominating, governance and sustainability committee of the board identifies and recommends to the board individuals qualified to serve as directors and on committees of the board; advises the board with respect to board and committee procedures; develops and maintains our corporate governance principles; oversees the evaluation of the board and the committees of the board; and assists the board in fulfilling its oversight responsibilities relating to the company’s sustainability strategy.

The nominating, governance and sustainability committee oversees the evaluation of the board’s and each committee’s performance at least annually. In addition, the nominating, governance and sustainability committee, in collaboration with the lead director, conducts a peer review of individual directors every other year. The board evaluation process is more fully described under “Board Evaluation Process” on page 12 below.

The nominating, governance and sustainability committee also reviews, at least on an annual basis, and reports to the board on trends and changes with respect to corporate governance law, regulation, and practice and with respect to the company’s sustainability strategy, including initiatives and policies relating to environmental stewardship, corporate social responsibility and corporate culture (except where delegated to other board committees). The committee also considers any other corporate governance and sustainability issues that arise from time to time and develops related recommendations for the board to consider.

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PROPOSAL 1—ELECTION OF DIRECTORS

Director Candidate Process

Under the charter of the nominating, governance and sustainability committee and our corporate governance guidelines, the nominating, governance and sustainability committee is responsible for assessing the appropriate balance of criteria required of board members and, in considering potential director candidates, will consider, among other things, the background and qualifications of the potential director candidate, including knowledge, experience, diversity (such as race, gender and national origin), personal and professional integrity, business judgment, time availability in light of other commitments, potential conflicts of interest and such other factors that the nominating, governance and sustainability committee considers appropriate in the context of the needs or stated requirements of the board, including the core competencies. The nominating, governance and sustainability committee has independent authority to select and retain a search firm to assist it in identifying qualified candidates for board membership and has the sole authority to approve the search firm’s fees and terms of engagement.

While we do not have a formal policy with regard to consideration of diversity in identifying director nominees, both the charter of the nominating, governance and sustainability committee and our corporate governance guidelines list diversity (such as race, gender and national origin) as one of many attributes and criteria that the committee will consider when identifying and recruiting candidates to fill positions on the board. The committee considers a broad range of diversity, including diversity with respect to experience, skill set, areas of expertise and professional background, in addition to race, gender and national origin. In 2020, the committee explicitly requested that the external search firm engaged to identify candidates for appointment to the board of directors include racially and ethnically diverse candidates in the slate for consideration and expects to include a similar requirement when engaging in general searches for board candidates in the future.

The nominating, governance and sustainability committee will consider director candidates recommended by stockholders, as well as by other sources, including our non-management directors, our chief executive officer, and other executive officers. In considering candidates submitted by stockholders, the committee will take into consideration the needs of the board and the qualifications of the candidate, according to the criteria set forth above. To have a director candidate considered by the committee, a stockholder must submit the recommendation in writing to the Corporate Secretary at the address listed below under “Contacting the Board” so that it is received at least 120 days prior to the anniversary date of our prior year’s annual meeting of stockholders. For the 2024 Annual Meeting of Stockholders, such recommendations must be received by the Corporate Secretary no later than January 5, 2024. The stockholder must supply the following with his or her recommendation, as well as certain other information, as described in our Bylaws:

In connection with its evaluation, the nominating, governance and sustainability committee may request additional information from the candidate or the recommending stockholder. The committee’s evaluation process does not vary based on whether or not a candidate is recommended by a stockholder.

Compensation Committee

The compensation committee articulates our compensation policy and principles, reviews and approves our compensation programs, including director compensation, and oversees our benefit plans. In this regard, the compensation committee oversees the administration of our incentive plans and may make grants, for example, of non-qualified stock options (“NQOs”), restricted stock units (“RSUs”) and performance share awards (“PSAs”) to executive officers, other key employees, directors and consultants; any such grants to Mr. Stanage are subject to approval by our independent directors. The compensation committee may delegate its authority to a subcommittee of its members.

Additional information regarding the compensation committee, including additional detail about the policies and principles of our compensation program, and information concerning the compensation consultant retained by the compensation committee (including a description of services provided by the consultant), is set forth under “Compensation Discussion and Analysis” beginning on page 22 of this proxy statement.

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PROPOSAL 1—ELECTION OF DIRECTORS

Board Leadership Structure

As stated in our corporate governance guidelines, we do not require separation of the offices of the Chairman of the Board and Chief Executive Officer (“CEO”). The board believes that the decision as to whether the positions of Chairman and CEO should be combined or separated, and whether an executive or an independent director should serve as Chairman if the roles are split, should be based upon the particular circumstances facing the company. Maintaining a flexible policy allows the board to choose the leadership structure that best serves the interests of the company and its stockholders at any particular time. At this time, the board continues to believe that combining the roles of CEO and Chairman is in the best interest of the company and its stockholders. The board believes that it is appropriate for Mr. Stanage to hold both offices because the combined role enables decisive leadership and clear accountability and enhances our ability to communicate our strategy clearly and consistently to stockholders and other key constituencies, such as our employees and key customers and suppliers. We also believe our board structure and board and committee oversight processes serve to facilitate our maintenance of a high standard of corporate governance and effective accountability of the CEO to the board, including the following:

Our Bylaws provide that if the Chairman of the Board is not independent, as is the case with Mr. Stanage, then the independent directors are required to designate an independent board member to serve as lead director. The independent directors have designated Mr. Campbell to serve as lead director. In addition to his authority to call a meeting of the independent directors, Mr. Campbell has the responsibilities listed below:

Under our corporate governance guidelines, non-management directors are required to meet in executive session, without management, on a regularly scheduled basis, but no less than two times a year. The lead director presides at such sessions.

The board periodically reviews the board’s leadership structure and its appropriateness given the needs of the board and the company at such time. In addition, the board believes its risk oversight framework, as described under “Risk Oversight” on page 13 of this proxy statement, would be effective under a variety of leadership structures, and therefore does not materially affect its choice of structure.

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PROPOSAL 1—ELECTION OF DIRECTORS

Board Evaluation Process

Board and committee evaluations play a critical role in ensuring the effective functioning of the board of directors. Our corporate governance guidelines assign responsibility for overseeing the annual board and committee evaluation process to the nominating, governance and sustainability committee. The evaluation process is adopted by the board upon recommendation of the nominating, governance and sustainability committee. The current board and committee evaluation process involves an annual self-evaluation by each director of the board as a whole and each standing committee of the board on which he or she serves and, every other year, a review of each individual director by his or her peer directors. The last individual director peer review was conducted in the fall of 2021 and the next one scheduled for the fall of 2023.

12				HEXCEL CORPORATION

 

PROPOSAL 1—ELECTION OF DIRECTORS

Risk Oversight

Board of Directors The board is actively involved in overseeing our risk management, both directly and through its standing committees, which provide regular reports to the board. Management presents to the board regularly regarding material risks facing the company, during which the board helps management define key risk and business continuity indicators, and determines any additional actions that should be taken to mitigate the risks. The board is regularly provided updates from leaders of our business units and engages in an in-depth strategic review where the most significant risks affecting the companys long-term plan are discussed. Our Chief Information Officer regularly reviews information technology and cybersecurity risks and the measures implemented to mitigate such risks with the board. The board regularly reviews the company's sustainability strategy with members of the companys sustainability strategy team, comprised of senior-level company employees representing each of the companys business units and functional groups, including matters related to climate change and long-term emissions reduction goals. Management updates the board regularly on significant human capital matters related to succession planning, diversity and inclusion, employee health and safety, and talent attraction, retention and development. Audit Committee Compensation Committee Nominating, Governance & Sustainability Committee Oversees risks related to: financial statements and financial reporting and accounting and internal controls, including meeting in executive session with independent auditor and internal audit the companys ethics and compliance program regulatory compliance tax insurance currency exchange and hedging policies Oversees risks related to: board and executive compensation policies and practices welfare and benefit plans talent attraction, motivation and retentionOversees risks related to: corporate governance practices board succession sustainability strategy and initiatives, policies and long-term goals related to the companys sustainability areas of focus Senior Management The company has an active enterprise risk management program, which is designed to measure, manage and aggregate risks on an enterprise-wide basis, and provide a systematic approach to risk assessment and mitigation. Under the enterprise risk management program, management identifies and assesses various risks facing the company, including internal risks related to our operations, strategy, financial condition, and employees, and external risks related to our markets, geographic locations and geopolitical conditions, global supply chain, cybersecurity, regulatory environment, sustainability (including climate change), and macroeconomic outlook, taking into account the likelihood of occurrence and potential impact. Management is responsible for developing an action plan to eliminate, mitigate or monitor such risks.

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PROPOSAL 1—ELECTION OF DIRECTORS

Succession Planning

The board regularly engages in a review of management development and succession planning to assess organizational and leadership effectiveness and conducts in-depth discussions regarding specific succession and contingency planning for all key senior leadership positions. In addition to the nominating, governance and sustainability committee’s review of the company’s human capital management actions and diversity and inclusion initiatives as part of its oversight of sustainability strategy, and the compensation committee’s review of risks relating to talent attraction, motivation and retention, during the board’s review of management development and succession planning, the full board reviews information related to the company’s diversity and inclusion metrics and initiatives, as well as other human capital strategy matters, including talent attraction, retention and development programs.

Stockholder Engagement

The company welcomes and seeks stockholder engagement throughout the year, and management will be available to answer questions from stockholders at the Annual Meeting. In addition, company management conducts stockholder outreach throughout the year to ensure management understands and considers the issues that matter most to our stockholders. Management regularly apprises the board of relevant and topical investor feedback. We provide regular updates regarding the company’s performance and strategic actions to the investor community, and we participate in numerous investor conferences, one-on-one meetings, earnings calls that include a question-and-answer period for analysts, investor days, and educational investor and analyst conversations. We also communicate with stockholders and other stakeholders through various other methods, including our annual report, proxy statement and other filings with the SEC, news releases, social media, webcasts and the Hexcel website. We believe ongoing stockholder engagement allows us to communicate our strategy, as well as understand and effectively respond to any stockholder concerns.

In the spring of 2022 and again in the fall of 2022, we engaged with a significant number of our stockholders, primarily to discuss topics related to the low Say-on-Pay support at the 2022 Annual Meeting. We answered stockholders’ questions regarding a variety of topics of interest to them, such as the impact of the COVID-19 pandemic on our business and our initiatives to realign the business in response, our return to growth, the design of our executive compensation program, board diversity and corporate governance best practices, and corporate social responsibility and sustainability matters. The chair of the compensation committee participated in a number of conversations with our stockholders, in addition to our Executive Vice President, Chief Human Resources Officer; Executive Vice President, General Counsel and Secretary (who participated in the fall 2022 engagements); and Vice President, Investor Relations.

Spring 2022 Outreach 75% of our outstanding shares

Stockholders representing 44% of our outstanding shares elected to meet with management, including each of our top 5 largest institutional investors

Fall 2022 Outreach 73% of our outstanding shares

Stockholders representing 36% of our outstanding shares elected to meet with management, including 4 of our top 5 largest institutional investors, with stockholders representing 26% of our outstanding shares confirming no call was necessary

The board of directors received regular updates related to the feedback we heard from our stockholders. The feedback we received through this engagement process was generally positive and constructive and made it clear that those stockholders who voted against the Say-on-Pay proposal at the 2022 Annual Meeting did so in response to the company’s specific pandemic-related compensation decisions made in 2021. With the effects of the pandemic largely behind us, we began to transition back to our traditional executive compensation program in 2022 and have completed the transition in 2023. More information on what we heard from our stockholders and the recent executive compensation actions taken by the compensation committee is set forth under “Compensation Discussion and Analysis” beginning on page 22 of this proxy statement.

Contacting the Board

Stockholders and other interested parties may contact the non-management members of the board or the lead director by sending their concerns to: Board of Directors, c/o Corporate Secretary, Hexcel Corporation, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, Connecticut 06901, or by email to CorporateSecretary@hexcel.com. The Corporate Secretary will review all communications and forward them to the lead director. The Corporate Secretary may, however, filter out communications that do not relate to our business activities, operations or public disclosures, but will maintain a record of these communications and make them available to the lead director. Any communications received by the lead director relating to accounting, internal controls or auditing matters will promptly be brought to the attention of the audit committee and will be handled in accordance with the procedures established by the audit committee to address these matters.

14				HEXCEL CORPORATION

 

PROPOSAL 1—ELECTION OF DIRECTORS

Code of Business Conduct

It is our policy that all of our directors, officers and employees worldwide conduct our business in an honest and ethical manner and in compliance with all applicable laws and regulations. Our board has adopted the Hexcel Code of Business Conduct, which applies to all of our directors, officers and employees worldwide, and addresses in detail our expectations with regard to conduct that fulfills our policy. The Code can be viewed on the Investor Relations section of our website, www.hexcel.com, under “Governance.” In addition, you may obtain a free copy of the Code by directing your request to Hexcel Corporation, Attention: Vice President, Investor Relations, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, Connecticut 06901, or by email to InvestorRelations@Hexcel.com. Any amendment to the Code of Business Conduct (other than technical, administrative or non-substantive amendments), or any waiver of a provision of the Code that applies to our directors or executive officers, will be promptly disclosed on the Investor Relations section of our website under “Governance.”

Director Compensation in 2022

The company’s director compensation program is designed to enhance its ability to attract and retain highly qualified directors and to align their interests with the long-term interests of our stockholders. The program includes a cash component, which is designed to compensate non-employee directors for their service on the board, and an equity component, which is designed to align the interests of non-employee directors and stockholders. The company also provides certain other benefits to non-employee directors, which are described below. Directors who are employees of the company receive no additional compensation for their service on the board.

The compensation committee regularly reviews compensation paid to our non-employee directors and makes recommendations for adjustments, as appropriate, to the full board. As part of this annual review, the compensation committee considers the significant time commitment and skill level required by each non-employee director in serving on the board and its various committees. The compensation committee seeks to maintain a market competitive director compensation program and, with the assistance of its independent compensation consultant, benchmarks our director compensation program against the peer group we use to evaluate our executive compensation program. In May 2022, the compensation committee performed its annual review of the director compensation program compared with the compensation peer group and survey data from the National Association of Corporate Directors (“NACD”). The review indicated that our directors were compensated below competitive levels for the company’s peer group and the NACD median. As a result, the board, upon the recommendation of the compensation committee, increased the annual cash retainer fee for non-employee directors by $15,000, and the nominating, governance and sustainability committee member and chair fees to align with the compensation committee member and chair fees, given the increase in committee responsibilities related to sustainability oversight.

Annual non-employee director cash compensation consists of a retainer of $88,000, increased from $73,000, effective in the second quarter of 2022, plus:

Each committee chair receives the following additional annual compensation:

Under our non-employee director compensation program, each non-employee director is permitted to elect to receive RSUs in lieu of his or her annual cash retainer (“Retainer RSUs”). In addition, upon initial election to the board and each reelection thereafter, each non-employee director receives a grant of RSUs (“Annual RSUs”) in an amount determined by the compensation committee following its receipt of the advice of its independent compensation consultant and its consideration of other relevant factors. The grant date value of Annual RSUs issued to directors in 2022 was $120,000. Non-employee director RSUs vest daily over the twelve months following the date of grant and convert into an equivalent number of shares of our common stock on the first anniversary of the grant date unless the director elects to defer conversion and delivery of the shares underlying the RSUs until termination of their service as a director. Vesting of Retainer RSUs is accelerated upon any termination of service as a director. If and when cash dividends are declared on

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PROPOSAL 1—ELECTION OF DIRECTORS

shares of our common stock, we provide dividend equivalents for each RSU then held by the non-employee director equal to the cash dividend that we pay to holders of our common stock, which vest at the same time as the underlying RSUs to which they relate and are paid in cash.

In addition to the annual compensation described above, if a special committee is designated by the board, each non-employee director who serves on the special committee will receive $1,000 for each meeting attended.

Our stock ownership guidelines, which are described on page 41, apply to non-employee directors, as well as executive officers. All of our non-employee directors, except Dr. Minus, who was appointed as a director in December 2020, are in compliance with the guidelines.

The table below summarizes the compensation paid by the company to non-employee directors for the fiscal year ended December 31, 2022:

16				HEXCEL CORPORATION

 

EXECUTIVE OFFICERS

EXECUTIVE OFFICERS

Set forth below is certain information concerning each of our current executive officers as of the date of this proxy statement. For additional information concerning Mr. Stanage, who has been an executive officer of Hexcel since 2009, see “PROPOSAL 1—ELECTION OF DIRECTORS—Information Regarding the Directors” on page 2.

PATRICK J. WINTERLICH
		Executive Vice President and Chief Financial Officer Executive Officer Since: 2017 Age: 53

Career Highlights:

GINA FITZSIMONS
		Executive Vice President, Chief Human Resources Officer Executive Officer Since: 2022 Age: 52

Career Highlights:

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EXECUTIVE OFFICERS

GAIL E. LEHMAN
		Executive Vice President, General Counsel and Secretary Executive Officer Since: 2017 Age: 63

Career Highlights:

* On February 8, 2016, Noranda filed for bankruptcy protection under the U.S. Bankruptcy Code.

Career Highlights:

18				HEXCEL CORPORATION

 

EXECUTIVE OFFICERS

THIERRY MERLOT
		President, Aerospace, Europe, Middle East, Africa and Asia Pacific and Industrial Executive Officer Since: 2016 Age: 63

Career Highlights:

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Stock Beneficially Owned by Principal Stockholders

The following table sets forth certain information as of December 31, 2022 with respect to the ownership by any person known to us to be the beneficial owner of more than five percent of the issued and outstanding shares of Hexcel common stock (the number of shares held by each listed stockholder may have changed subsequent to December 31, 2022):

20				HEXCEL CORPORATION

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Stock Beneficially Owned by Directors and Officers

The following table contains information regarding the beneficial ownership of shares of Hexcel common stock as of March 10, 2023 by our current directors and the executive officers listed in the Summary Compensation Table and by all current directors and executive officers as a group. Except as otherwise indicated in the footnotes to the table, we have been informed that each person listed had sole voting power and sole investment power over the shares of common stock shown opposite his or her name.

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COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION & ANALYSIS

2022 NEO Executive Summary

In this Compensation Discussion and Analysis (“CD&A”), we address the compensation paid or awarded to the following executive officers of the company, who are listed in the Summary Compensation Table that follows this discussion, and whom we refer to as our “named executive officers” or “NEOs”:

 

		Nick L. Stanage Chairman, Chief Executive Officer and President				Patrick J. Winterlich Executive Vice President and Chief Financial Officer				Gail E. Lehman Executive Vice President, General Counsel and Secretary

 

		Thierry Merlot President, Aerospace, Europe, Middle East, Africa and Asia Pacific & Industrial				Gina Fitzsimons Executive Vice President, Chief Human Resources Officer

Our named executive officers for 2022 also include Robert G. Hennemuth, who served as our Executive Vice President, Chief of Staff until his involuntary termination by the company without “cause” on May 31, 2022 and Colleen Pritchett, who served as our President, Aerospace, Americas until her involuntary termination by the company without “cause” on April 30, 2022. This CD&A focuses primarily on the compensation earned by our current named executive officers listed in the table above, but also describes, where appropriate, the compensation earned by Mr. Hennemuth and Ms. Pritchett.

Stockholder Engagement and Consideration of Last Year’s Advisory Say-on-Pay Vote

The compensation committee considers stockholder feedback and results of the annual advisory vote on executive pay (Say-on-Pay) when structuring our executive pay program. The company routinely engages stockholders in part to better understand their views on governance and executive compensation practices. The feedback we receive from stockholders enables the compensation committee to better understand stockholder perspectives, which has resulted in historically favorable Say-on-Pay proposal support since its inception in 2011.

With the onset of the COVID-19 pandemic and its impact on the global economy, and especially the commercial aerospace industry, we made certain one-time changes to our executive compensation program in 2021 as part of our efforts to return Hexcel to profitable growth and to enhance long-term stockholder value. Certain changes, such as the one-time “return to growth” equity grants and changes to the performance metrics and measurement period under our long-term incentive program, were viewed negatively by proxy advisory firms and some stockholders. We nonetheless believe that these one-time changes were essential to retaining and incentivizing our strong management team to position Hexcel for a profitable return to growth, including generating cash to deleverage, and to enhance long-term stockholder value.

22				HEXCEL CORPORATION

 

COMPENSATION DISCUSSION AND ANALYSIS

Historically, our stockholders have overwhelmingly supported our executive compensation programs, with an average level of support for our Say-on-Pay proposal of approximately 92% of the votes cast during the Annual Meetings of Stockholders held in each of 2011 through 2021. Unfortunately, this trend ended at the 2022 Annual Meeting, where only 41% of our stockholders expressed support for the Say-on-Pay proposal (based on total votes cast). We were disappointed with this result.

Prior to the 2022 Annual Meeting, we engaged with a significant number of our stockholders. We answered their questions regarding a variety of topics of interest to them, such as the impact of the COVID-19 pandemic on our business and our initiatives to realign the business in response, our return to growth, the design of our executive compensation program, board diversity and corporate governance best practices, and corporate social responsibility and sustainability matters. In the fall of 2022, we completed another round of stockholder outreach prior to the compensation committee’s 2023 compensation decisions, in response to the low support for our Say-on-Pay proposal at the 2022 Annual Meeting. The following is a summary of our stockholder engagement efforts over the last year:

The feedback we received from investors through this engagement process was generally positive and constructive and made it clear that those stockholders who voted against the Say-on-Pay proposal at the 2022 Annual Meeting did so in response to the company’s specific pandemic-related compensation decisions made in 2021. Investors expressed support for our historical executive compensation program, including the design of our annual incentive program and long-term incentive program, particularly the emphasis on performance-based equity. Investors also appreciated the transition back to our traditional long-term incentive program design in 2022 and 2023, which once again emphasizes Return On Invested Capital (“ROIC”) and Relative EPS Growth over a three-year performance period, and our commitment not to grant similar “return to growth” equity awards in the future, except under extraordinary circumstances.

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COMPENSATION DISCUSSION AND ANALYSIS

Summary of Key Compensation Changes for 2022 and 2023

Our compensation programs continue to be primarily performance-based, with a significant portion of executive pay at-risk. We establish performance targets that are rigorous and reflective of the business plan we communicate to investors. With the effects of the pandemic largely behind us, we began to transition back to our traditional executive compensation program in 2022 and completed the transition in 2023. Our stockholder engagement efforts provided helpful feedback regarding our executive compensation program and reinforced the committee’s decision to return to our traditional compensation program. Summarized below are the specific actions we recently took, based in part on stockholder feedback.