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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.           )

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Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 6, 2010

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        The Annual Meeting of Stockholders of Hexcel Corporation will be held in the Community Room, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, Connecticut, on May 6, 2010 at 10:30 a.m. for the following matters:

1.

To elect ten individuals (Joel S. Beckman, David E. Berges, Lynn Brubaker, Jeffrey C. Campbell, Sandra L. Derickson, W. Kim Foster, Jeffrey A. Graves, David C. Hill, David C. Hurley and David L. Pugh) to serve as directors until the next annual meeting of stockholders and until their successors are duly elected and qualified;



2.

To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2010; and



3.

To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

        Stockholders of record at the close of business on March 15, 2010 will be entitled to vote at the meeting and any adjournments or postponements. A list of these stockholders will be available for inspection at the executive offices of Hexcel and will also be available for inspection at the annual meeting.

Dated: March 24, 2010

YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND COMPLETE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID, RETURN ENVELOPE.

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Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238

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PROXY STATEMENT

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ANNUAL MEETING OF STOCKHOLDERS
To be held on May 6, 2010

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THE MEETING

        This proxy statement is furnished to the holders of Hexcel Corporation ("Hexcel" or the "company") common stock (the "Common Stock"), in connection with the solicitation of proxies 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 (the "Annual Meeting") to be held on May 6, 2010, or any adjournments or postponements thereof. This proxy statement and the accompanying proxy/voting instruction card are first being mailed to stockholders on or about March 24, 2010.

        Only stockholders of record at the close of business on March 15, 2010, will be eligible to vote at the Annual Meeting or any adjournments or postponements thereof. As of that date, 96,990,423 shares of Common Stock were issued and outstanding and such shares were held by 1,102 holders of record. The holders of 48,495,212 shares will constitute a quorum at the meeting.

        Each share of Common Stock entitles the holder thereof to one vote with respect to each matter that is subject to a vote at the Annual Meeting. All shares that are represented by effective proxies received by the company in time to be voted shall be voted at the Annual Meeting or any adjournments or postponements thereof. Where stockholders direct how their votes shall be cast, shares will be voted in accordance with such directions. If a stockholder returns a signed proxy and does not otherwise instruct how to vote on the proposals, then the shares represented by the proxy will be voted in favor of each of the director candidates nominated by the board, in favor of the ratification of the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2010, and in the discretion of the proxy holders on any other matters that may come before the Annual Meeting or any adjournments or postponements thereof. Proxies submitted with abstentions will be included in determining whether or not a quorum is present.

        Pursuant to the rules of the New York Stock Exchange ("NYSE"), if you hold your shares in street name through a broker, your broker is not permitted to vote your shares on Proposal 1 (election of directors) unless you give your broker specific instructions as to how to vote. If you are a street name holder and do not provide instructions to your broker on Proposal 1, your shares that are voted on any other matter will count toward a quorum but your broker cannot vote your shares on Proposal 1 (a "broker non-vote"). Accordingly, a broker non-vote will not be counted as a vote on Proposal 1. However, if you obtain, sign and return a proxy card, it will be voted as you instruct on the card or, if you do not provide instructions, it may be voted in the proxy holder's discretion on any proposal including Proposal 1.

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        We will pay all costs of preparing, assembling, printing and distributing the proxy materials. Management has retained Morrow & Co., LLC, 470 West Avenue, Stamford, Connecticut, 06902, to assist in soliciting proxies for a fee of approximately $7,000, plus reasonable out-of-pocket expenses. Our employees may solicit proxies on behalf of our board through the mail, in person, and by telecommunications. We will request that brokers and nominees who hold shares of common stock in their names furnish proxy solicitation materials to beneficial owners of the shares, and we will reimburse the brokers and nominees for reasonable expenses incurred by them.

Revoking a Proxy

        Any stockholder giving a proxy may revoke it at any time prior to the voting thereof by:

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mailing a revocation to Mr. Ira J. Krakower, the Secretary of the company, at the above address with a later date than any previously completed proxy so long as it is received prior to the Annual Meeting;



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submitting another properly completed proxy dated later than any previously completed proxy so long as it is received prior to the Annual Meeting;



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by filing a written revocation at the Annual Meeting with Mr. Krakower, the Secretary of the company; or



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by casting a ballot at the meeting.

        If you are an employee stockholder that holds shares through one of our benefit plans, you may revoke voting instructions given to the trustee for the applicable plan by following the instructions under "Employee Stockholder" in this proxy statement.

Matters of Business, Votes Needed and Recommendations of the Board of Directors

Proposal 1—Election of Directors

        Each outstanding share of our stock is entitled to one vote for as many separate nominees as there are directors to be elected. There are ten directors to be elected. The board has nominated David E. Berges, Joel S. Beckman, Lynn Brubaker, Jeffrey C. Campbell, Sandra L. Derickson, W. Kim Foster, Jeffrey A. Graves, David C. Hill, David C. Hurley and David L. Pugh for election to board. Each of these ten nominees is currently a director of the company. A plurality of the votes cast in person or by proxy at the Annual Meeting and entitled to vote is required to elect each of the nominees for director. Under applicable NYSE rules, brokers are not permitted to vote shares held in street name for a beneficial owner without specific instructions from the beneficial owner. In the absence of such instructions, these "broker non-votes" will be disregarded and will have no effect on the outcome of the vote. Under applicable Delaware law, a proxy marked to withhold authority to vote on a proposal to elect directors will be disregarded and will have no effect on the outcome of the vote. The board of directors recommends that you vote FOR the election of each of the board's nominees for director.

Proposal 2—Ratification of Independent Registered Public Accounting Firm

        Ratification of the appointment of PricewaterhouseCoopers LLP to audit the company's financial statements for 2010 requires the favorable vote of a majority of the shares present in person or by proxy and entitled to vote on the matter at the Annual Meeting once a quorum is present. Abstentions will be counted and will have the same effect as a vote against the proposal. Under applicable NYSE rules, brokers are permitted to vote shares held in street name for a beneficial owner without specific instructions from the beneficial owner. The audit committee is responsible for appointing the company's independent registered public accounting firm. The audit committee is not bound by the outcome of this vote but will consider these voting results when selecting the company's independent

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auditor for 2010. The board of directors recommends that you vote FOR the ratification of the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2010.

How to Vote Your Shares

Voting shares you hold through a nominee

        If you hold shares through someone else, such as a stockbroker, bank or nominee, you will receive material from that firm asking you for instructions on how your shares should be voted. You can complete that firm's voting instruction form and return it as requested by the firm. If the firm offers Internet or telephone voting, the voting form will contain instructions on how to vote using those voting methods.

If You Plan to Attend the Meeting

        Please note that attendance will be limited to stockholders as of the record date. Admission will be on a first-come, first-served basis. Each stockholder may be asked to present valid picture identification, such as a driver's license or passport. Stockholders holding stock in brokerage accounts or by a bank or other nominee may be required to show a brokerage statement or account statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. You may contact Morrow & Co., LLC at (800) 607-0088 to obtain directions to the site of the Annual Meeting. The doors to the meeting will open at 10:00 a.m. local time and the meeting will begin at 10:30 a.m. local time.

Voting in person

        If you are a registered stockholder, you may vote your shares in person by ballot at the Annual Meeting.

        If you hold your shares in a stock brokerage account or through a bank or other nominee, you will not be able to vote in person at the Annual Meeting unless you have previously requested and obtained a "legal proxy" from your broker, bank or other nominee and present it at the Annual Meeting along with a properly completed ballot.

Employee Stockholders

        If you hold shares through our employee stock purchase plan or our tax-deferred 401(k) savings plan, you will receive a separate voting instruction form to instruct the custodian or trustee for the applicable plan as to how to vote your shares. With respect to the 401(k) plan, all shares of Common Stock for which the trustee has not received timely instructions shall be voted by the trustee in the same proportion as the shares of Common Stock for which the trustee received timely instructions, except in the case where to do so would be inconsistent with the provisions of Title I of ERISA. With respect to our employee stock purchase plan, we have been advised by the custodian that all shares of Common Stock for which the custodian has not received timely instructions will not be present for quorum purposes and will not be voted.

Inspectors of Election

        At the Annual Meeting, American Stock Transfer & Trust Company will count the votes. Its officers or employees will serve as inspectors of election.

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ELECTION OF DIRECTORS

        At the 2010 annual meeting, ten directors will be elected to hold office until the 2011 annual meeting 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 Hexcel.

        Shares represented by an executed and returned proxy card will be voted for the election of the ten nominees recommended by the board, unless the proxy is marked to withhold authority to vote. If any nominee for any reason is unable to serve, the shares of common stock represented by the proxy card may, at the board's discretion, be voted for an alternate person as the board may nominate. We are not aware of any nominee who will be unable to or will not serve as a director. Each of the nominees has consented to being named in this proxy statement and to serve if elected.

        A plurality of the votes cast in person or by proxy at the Annual Meeting and entitled to vote is required to elect directors. Under applicable NYSE rules, brokers are not permitted to vote shares held in street name for a beneficial owner without specific instructions from the beneficial owner. In the absence of such instructions, these "broker non-votes" will be disregarded and will have no effect on the outcome of the vote.

Information Regarding the Directors

        All of our current directors have been nominated for re-election to the board. Set forth below is certain information concerning each of our current directors. There are no family relationships among any of our executive officers and any of the nominees.

        DAVID E. BERGES has served as Chairman of the Board of Directors and Chief Executive Officer of Hexcel since July 2001, and was President of Hexcel from February 2002 to February 2007. Prior to joining Hexcel, Mr. Berges was President of the Automotive Products Group of Honeywell International Inc. from 1997 to July 2001 and Vice President and General Manager, Engine Systems and Accessories, at AlliedSignal Aerospace from 1994 to 1997. Previously Mr. Berges was President and Chief Operating Officer of Barnes Aerospace, a division of Barnes Group Inc. Mr. Berges spent the first fifteen years of his career in a variety of managerial and technical positions with the General Electric Company. Mr. Berges was a director of Dana Corporation from 2004 to January 2008.

        JOEL S. BECKMAN has been a director of Hexcel since March 2003, and is chair of the finance committee of Hexcel and a member of Hexcel's compensation committee. Mr. Beckman is a Managing Partner of Greenbriar Equity Group LLC, a private equity fund focused exclusively on making investments in transportation and transportation-related companies. Prior to founding Greenbriar in 2000, Mr. Beckman was a Managing Director and Partner of Goldman, Sachs & Co., which he joined in 1981. Mr. Beckman is a member of the board of directors of American Tire Distributors, Inc., Stag-Parkway, Inc., Grakon International, Inc. and Western Peterbilt, Inc., and is active in various civic organizations.

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        LYNN BRUBAKER has been a director of Hexcel since December 2005, and is a member of the compensation committee and nominating and corporate governance committee of Hexcel. She retired after spending over 25 years in the aerospace industry in a variety of executive, operations, sales and marking and customer support roles. From 1999 until June 2005 she was Vice President/General Manager—Commercial Aerospace for Honeywell International, with her primary focus in that role being on business strategies and customer operations for Honeywell's global commercial markets. From 1997 to 1999, Ms. Brubaker was Vice President Americas for Honeywell, and from 1995 to 1997, prior to AlliedSignal's merger with Honeywell, she was Vice President, Marketing, Sales and Support Operations, for AlliedSignal. Prior to joining AlliedSignal, Ms. Brubaker held a variety of management positions with McDonnell Douglas, Republic (predecessor to Northwest Airlines), and Comair. Ms. Brubaker has been a director of FARO Technologies, Inc. since July 2009, and currently serves on the board of a variety of private companies and other business organizations.

        JEFFREY C. CAMPBELL has been a director of Hexcel since November 2003, and is chair of the audit committee of Hexcel. Mr. Campbell has served as Executive Vice President and Chief Financial Officer of McKesson Corporation, a leading healthcare services, information technology and distribution company, since January 2004. Mr. Campbell was Senior Vice President and Chief Financial Officer of AMR Corp, the parent company of American Airlines, from June 2002 to December 2003, served as a Vice President of American Airlines from 1998 to June 2002 and served in various management positions of American Airlines from 1990 to 1998.

        SANDRA L. DERICKSON has been a director of Hexcel since February 2002. Ms. Derickson is chair of the nominating and corporate governance committee and is a member of the compensation committee of Hexcel. Ms. Derickson retired from HSBC in February 2007. She held several management positions at HSBC from September 2000 to February 2007 including President and Chief Executive Officer, HSBC Bank USA; Vice Chairman, HSBC Finance; and Group Executive, HSBC Finance. During her tenure, she was responsible for private label credit cards, insurance services, taxpayer services, auto financing and some of the Group's mortgage businesses. From 1976 to 1999, Ms. Derickson held various management positions with General Electric Capital Corporation, the last of which was President of GE Capital Auto Financial Services. Ms. Derickson was also an officer of the General Electric Company.

        W. KIM FOSTER has been a director of Hexcel since May 2007, and is a member of the audit committee of Hexcel. Mr. Foster has served as Senior Vice President and Chief Financial Officer of FMC Corporation, a chemical manufacturer serving various agricultural, industrial and consumer markets, since 2001. Prior to serving in his current role, Mr. Foster held numerous other executive and management positions with FMC, including Vice President and General Manager—Agricultural Products Group from 1998 to 2001; Director, International, Agricultural Products Group from 1996-1998; General Manager, Airport Products and Systems Division, 1991-1996; and Program Director, Naval Gun Systems, FMC Defense Group, from 1989 to 1991. Mr. Foster was a director of JLG Industries, Inc. from January 2005 to December 2006.

        JEFFREY A. GRAVES has been a director of Hexcel since July 2007, and is a member of the finance committee and nominating and corporate governance committee of Hexcel. Dr. Graves has served as President and Chief Executive Officer of C&D Technologies, Inc., a producer of electrical power storage systems, since 2005. From 2001 to 2005 he was employed by Kemet Corporation as Chief Executive Officer (2003 to 2005); President and Chief Operating Officer (2002-2003); and Vice President of Technology and Engineering (2001-2002). From 1994 to 2001 Dr. Graves was employed by the General Electric Company, holding a variety of Management positions in GE's Power Systems Division from 1996 to 2001, and in the Corporate Research and Development Center from 1994 to 1996. Prior to General Electric, Dr. Graves was employed by Rockwell International and Howmet Corporation, now a part of Alcoa Corporation. Dr. Graves is also a member of the board of directors

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of C&D Technologies, Inc. and Teleflex, Inc., and served on the board of Technitrol, Inc. from January 2006 through May 2007.

        DAVID C. HILL has been a director of Hexcel since May 2008, and is a member of the audit committee and finance committee of Hexcel. Dr. Hill served as President and Chief Executive Officer of Sun Chemical Corporation, a producer of printing inks and pigments, from 2001 until his retirement in Dec 2007. During this time he was also a Supervisory Board member of Sun Chemical Group B.V. Prior to joining Sun Chemical Corporation in 2001, Dr. Hill spent four years at JM Huber Corporation as President of Engineered Materials. From 1980 to 1997, Dr. Hill served at AlliedSignal Inc., where he was President, Fibers from 1991 to1994, Chief Technology Officer, Engineered Materials from 1994 to 1995 and President, Specialty Chemicals through 1997. Dr. Hill began his career at Union Carbide Corporation in 1970, and has also been Director of Exploratory and New Ventures Research at Occidental Petroleum Corporation. He holds a Ph.D. in Materials Science and Engineering as well as an M.S. in Engineering and a B.S. in Materials Science and Engineering from Massachusetts Institute of Technology. Dr. Hill is a member of the board of directors of Symyx Technologies, Inc., and serves as a member of its compensation and governance committees.

        DAVID C. HURLEY has been a director of Hexcel since November 2005, and is a member of the audit committee of Hexcel. He is currently the Vice Chairman of PrivatAir, a corporate aviation services company based in Geneva, Switzerland, where he served as Chief Executive Officer from 2000 to February 2003. Prior to 2000, Mr. Hurley was the Chairman and Chief Executive Officer of Flight Services Group (FSG), a corporate aircraft management and sales company, which he founded in 1984 and was acquired by PrivatAir in 2000. Before founding FSG, Mr. Hurley served as Senior Vice President of Domestic and International Sales for Canadair Challenger. He currently serves on the boards of Genesee & Wyoming Inc., Applied Energetics, Inc., ExelTech Aerospace, Inc. and Aviation Partners Boeing, Inc., a joint venture of The Boeing Company and Aviation Partners, Inc. Hurley is also chairman of the Smithsonian Institution's National Air and Space Museum board, and serves on the board of a variety of private companies. Mr. Hurley served on the board of BE Aerospace, Inc. from 2003 through April 2007, and on the board of Genesis Lease Limited until February 2010.

        DAVID L. PUGH has been a director of Hexcel since July 2006, and is chair of the compensation committee of Hexcel. Mr. Pugh has served as the Chairman of Applied Industrial Technologies Inc., one of North America's leading industrial product distributors, since October 2000, and as Applied's Chief Executive Officer since January 2000. He was President of Applied from 1999 to October 2000. Prior to joining Applied, Mr. Pugh was senior vice president of Rockwell Automation and general manager of Rockwell's Industrial Control Group. Prior to joining Rockwell, Mr. Pugh held various sales, marketing and operations positions at Square D. Co. and Westinghouse Electric Corp. Mr. Pugh is a director of OM Group, Inc.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR

Independence of Directors

        The board affirmatively determined that each of our nominees, other than Mr. Berges, our Chairman and Chief Executive Officer, meets the director independence requirements of the listing standards of the NYSE. In making these determinations our board considered all relevant facts and circumstances including whether a director has a "material relationship" with Hexcel as contemplated by the NYSE listing standards. One non-employee director has a direct or indirect relationship with Hexcel other than as a director of Hexcel. Ms. Brubaker is a director of a private aerospace company that is a customer of Hexcel. In determining that Ms. Brubaker is independent, our board considered, among other things, the sales to the private aerospace company as a percentage of Hexcel's total sales, and that Ms. Brubaker has no significant direct or indirect pecuniary interest in the business

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relationship between Hexcel and the private aerospace company. Under applicable NYSE listing standards, Mr. Berges is not independent by virtue of his being employed by Hexcel.

Meetings and Standing Committees of the Board of Directors

General

        During 2009 there were seven meetings of the board and 22 meetings in the aggregate of the four standing committees of the board. The board also acted twice by written consent. Each of the incumbent directors who served on the board and its committees during 2009 attended or participated in at least 75% of the aggregate number of board meetings and applicable committee meetings held during 2009. A director is expected to regularly attend and participate in meetings of the board and of committees on which the director serves, and to attend the annual meeting of stockholders.

        The board has established the following standing committees: audit committee; compensation committee; nominating and corporate governance committee; and, as of February 2009, finance committee. The board may establish other special or standing committees from time to time. Members of committees serve at the discretion of the board. Each of our four standing committees operates under a charter adopted by the board. The charter for each committee except the finance committee requires that all members be independent as required by NYSE listing standards. The charter of the finance committee prohibits the committee from taking any action that is required by NYSE rules to be taken by a committee composed entirely of independent directors, unless the finance committee is composed entirely of independent directors. Our board has also adopted a set of corporate governance guidelines. All committee charters and the corporate governance guidelines can be viewed on the investor relations section of our website, www.hexcel.com, under "corporate governance." You may obtain a copy of any of these documents, free of charge, by directing your request to Hexcel Corporation, Attention: Investor Relations Manager, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, CT 06901, telephone (203) 352-6826.

Audit Committee

        The audit committee assists the board's 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. During 2009 the audit committee held seven meetings. 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 64 of this proxy statement. The current members of the audit committee are Messrs. Campbell (chair), Foster, Hill and Hurley.

        NYSE listing standards require each member of the audit committee to be independent, as described above under "Independence of Directors." Members of the audit committee are also required to satisfy an additional SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from Hexcel or any of its subsidiaries other than directors' compensation. NYSE listing standards also require that each member of the audit committee be financially literate and that at least one member of the committee have accounting or related financial management expertise. Finally, SEC rules require that we disclose whether our audit committee has an "audit committee financial expert," which generally means a person with an understanding of financial and accounting matters, including internal controls and audit committee functions, who has acquired this understanding through appropriate professional experience.

        Each member of our audit committee is independent under NYSE listing standards and satisfies the additional SEC independence requirement described above. All members of our audit committee meet the financial literacy requirements of the NYSE and at least one member has accounting or

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related financial management expertise as required by the NYSE. In addition, our board has determined that Jeffrey C. Campbell, who currently is Executive Vice President and Chief Financial Officer of McKesson Corporation, is an audit committee financial expert under SEC rules. In making this determination, the board considered, among other things, Mr. Campbell's extensive knowledge and experience with respect to the financial reporting process for public companies, including his former position as Senior Vice President and Chief Financial Officer of AMR Corp, the parent company of American Airlines, his experience as an auditor for a predecessor of Deloitte & Touche, and his formal education.

        The audit committee has adopted procedures for the receipt, retention and handling of concerns regarding accounting, internal accounting controls and auditing matters by employees, stockholders and other persons. Any person with such a concern should report it to the board as set forth under "Contacting the Board" on page 13. The audit committee has also adopted procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Employees should consult the Hexcel Code of Business Conduct for information on how to report any such concern.

        The audit committee has established policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm. These policies and procedures are described on page 65 of this proxy statement.

Nominating and Corporate Governance Committee

        The nominating and corporate governance committee regularly seeks input from the board regarding the skills and attributes it believes new nominees should possess in order to strengthen 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 recommends to the board, and reviews periodically, our corporate governance principles; and oversees the evaluation of the board, the committees of the board and management. The committee has independent authority to select and retain any 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. The current members of the nominating and corporate governance committee are Ms. Derickson (chair), Ms. Brubaker and Mr. Graves, each of whom is independent under NYSE listing standards. During 2009 the nominating and corporate governance committee held four meetings.

        The nominating and corporate governance committee believes that each nominee for director should demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the board's supervision and oversight of the business and affairs of Hexcel. The committee also considers the following when selecting candidates for recommendation to the board: broad business knowledge, experience, professional relationships, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, potential conflicts of interest and such other factors that the committee considers appropriate, from time to time, in the context of the needs or stated requirements of the board.

        We do not have a formal policy with regard to consideration of diversity in identifying director nominees. However, both the charter of the nominating and corporate governance committee and our corporate governance guidelines list diversity as one of many attributes and criteria that the committee will consider when identifying and recruiting candidates to fill positions on the board. Our corporate governance guidelines also state that our board should generally have no fewer than ten directors to permit diversity of experience. The committee considers a broad range of diversity, including diversity with respect to experience, skill set, age, areas of expertise and professional background, as well as race, gender and national origin. Our informal policy regarding consideration of diversity is implemented through discussions among the committee members, and by the committee with our

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outside search firm and with senior management. The committee assesses the effectiveness of this policy through its annual self-evaluation, a report of which is delivered to the board. Every board candidate search undertaken by us in the last nine years has included diversity as a desired attribute for the candidate.

        All nominees for election to the board are currently serving as directors, and have served on our board for between two and eight years. In concluding that our current directors should continue to serve on our board, we considered the following attributes of our directors, which we have observed during the tenure of our directors' service: extensive familiarity with large-scale manufacturing operations; industry expertise and professional relationships; the ability to utilize extensive past experience in management, finance, technology and operations, and other areas, to address issues facing Hexcel on a consistent 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, financing and other proposals suggested by management. In addition to these factors and those mentioned in the preceding paragraph, we also considered the following in concluding that our current directors should continue to serve on our Board:

        Mr. Berges: prior to becoming CEO of Hexcel, had 30 years management and operations experience at GE, Barnes Group and Honeywell, including three years as President of the Automotive Group at Honeywell, a $2B business with over 10,000 employees

        Mr. Beckman: ten years experience as managing partner of, and a founder of, Greenbriar Equity Group, a private equity firm that invests exclusively in transportation (including aerospace) companies; 18 years experience at Goldman Sachs, where he founded the global transportation business group. In addition to Mr. Beckman's valuable contributions related to the transportation sector, his private equity exposure has made him a key contributor to refinancing discussions since joining the board.

        Ms. Brubaker: over 30 years experience in the commercial aerospace, defense and space industries, in a variety of executive, operations, sales, marketing, customer support and independent consultant roles. Ms. Brubaker's experience runs the gamut from operator, to airframer, to original equipment manufacturer, to aftermarket. Her ongoing aerospace industry involvement and relationships provide the board with additional customer feedback independent of management. Ms. Brubaker has used her expertise in sales and marketing management to assess, advise and mentor Hexcel sales management.

        Mr. Campbell: extensive experience in finance and accounting, including his current role as CFO of McKesson, a $100 billion healthcare services company; over ten years in executive and management positions in the aerospace industry (American Airlines). Mr. Campbell's financial acumen has made him a valuable audit committee contributor (Mr. Campbell is chair of our audit committee), and due to his experience as CFO of a major public company he has provided valuable expertise and guidance in areas such as compliance, risk management, financing, investor relations and systems solutions.

        Ms. Derickson: 30 years executive and global operating experience with HSBC and General Electric, including overseeing acquisitions, start-ups and restructurings. Ms. Derickson's long career with large international companies provides important "best practice" perspectives in such areas as manpower development, succession planning, organizational design and growth. Ms. Derickson was our first director added after we identified diversity as a desired attribute for directors. As chair of the nominating and corporate governance committee she has led the development of a better balanced board, and scheduled corporate governance training for all directors.

        Mr. Foster: over 30 years management, operations and finance experience with FMC Corporation, an NYSE-listed chemical manufacturer, including the last seven years as CFO as well as experience as a director of another public company. Mr. Foster has been a valuable member of the audit committee since joining the board. He provides critical expertise and advice in the finance and investor relations

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areas, and his background in chemical operations has proven valuable in connection with discussions of capital spending and global sourcing.

        Mr. Graves: eight years experience as a CEO of two NYSE-listed companies; significant global operations and R&D experience, including with GE; holds a PhD in Materials Science; extensive prior involvement in materials development and application processes for airframe and propulsion systems; significant experience as a director of other US public companies. In addition to the obvious value as an experienced CEO of two public companies, Mr. Graves was recruited to the board to help fill a critical need for additional technical expertise. Soon after joining the board, he conducted a full review of Hexcel's research and technology strategy and leadership, and reported back to the board with his findings and recommendations. He has extensive experience doing business in China and India, enabling him to provide valuable contributions to discussions related to Hexcel's Asia and Far East strategy, particularly with respect to industrial markets such as wind energy. Mr. Graves has provided valuable guidance regarding our R&D programs and organization as well as information technology projects based on his past experience with the implementation of Enterprise Resource Planning initiatives.

        Mr. Hill: over 40 years' management, operations and technology experience in large-scale chemicals and engineered materials organizations, including two years as CEO of Sun Chemical Corporation; extensive knowledge regarding the manufacture and use of carbon fiber; member of the National Association of Corporate Directors. Mr. Hill was selected to join the board at a time when Hexcel was embarking on a significant capital spending program to add carbon fiber capacity. The board felt a need for additional technical expertise, particularly related to large chemical-based fiber facilities. His extensive experience with the application of continuous improvement techniques to maximize capital efficiency has made him a key contributor to the board, particularly in connection with capital expansion, utilization and resources.

        Mr. Hurley: over 40 years in management, operations and finance in the aerospace industry, and extensive experience as a director of US public companies. Mr. Hurley's deep knowledge and strong relationships in the commercial and military aerospace industries has provided the board with critical insight related to major new programs, market trends, and customer perspectives. In addition, Mr. Hurley has provided management valuable introductions to customer contacts throughout the industry.

        Mr. Pugh: CEO of an NYSE-listed company for ten years; extensive operations and sales and marketing experience in large-scale manufacturing organizations; and extensive experience as a director of public companies. Mr. Pugh's expertise in factory control systems and equipment maintenance programs has provided valuable expertise to the board and to our operations management team. Mr. Pugh is chair of the compensation committee and brings important perspectives in the executive compensation area to both the compensation committee and the board, as a result of his varied experiences with other public boards.

        The committee will consider director candidates recommended by stockholders, as well as by other means such as 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. To have a candidate considered by the committee, a stockholder must submit the recommendation in writing to our 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. The stockholder must supply the following information with his or her recommendation:

•

The name and record address of the stockholder and evidence of the stockholder's ownership of Hexcel stock, including the class and number of shares owned of record or beneficially (and

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including any other direct or indirect pecuniary or economic interest in Hexcel stock) and the length of time the interest in the shares have been held

•

The name, age, business address and residence address of the candidate, a listing of the candidate's qualifications to be a director, and the person's consent to be named as a director if selected by the committee and nominated by the board



•

Any information about the stockholder and the candidate which would be required to be disclosed in a proxy statement or other filing relating to the election of directors



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A representation that the stockholder intends to appear in person at the annual meeting to nominate the candidate



•

Any material interest of the stockholder relating to the nomination of the candidate, including a description of all arrangements or understandings between the stockholder and the candidate



•

A description of all arrangements or understandings between the stockholder and any other person, naming such other person, relating to the recommendation of such candidate

        The committee's evaluation process does not vary based on whether or not a candidate is recommended by a stockholder, although the board may take into consideration the number of shares held by a recommending stockholder and the length of time that such shares have been held.

Compensation Committee

        The compensation committee oversees, reviews and approves our compensation and benefit plans and programs and defines the goals of compensation policy. In this capacity, the compensation committee administers our incentive plans and makes grants of stock options and/or awards of restricted stock units or other equity based compensation to executive officers, other key employees, directors and consultants. The current members of the compensation committee are Mr. Pugh (chair), Mr. Beckman, Ms. Brubaker and Ms. Derickson, each of whom is independent under NYSE listing standards. During 2009 the compensation committee held eight meetings and acted once by written consent.

        Additional information regarding the compensation committee, including additional detail about the objectives, policies, processes and procedures of the compensation committee, is set forth in Compensation Discussion and Analysis on page 17 of this proxy statement.

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 as the company has no other stated policy on this matter. The board believes that it is appropriate for Mr. Berges to hold both offices because we have in place sound counter-balancing mechanisms to ensure that we maintain the highest standards of corporate governance and effective accountability of the CEO to the board, including the following:

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Each of the other nine directors on the board are independent



•

The board has named a presiding director, whose responsibilities are described in detail below



•

Mr. Berges' performance and compensation is reviewed, and Mr. Berges' compensation is set, by the compensation committee, with formal oversight by the independent directors as a group



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The independent directors meet in regular executive sessions without management



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The board provides oversight of succession planning for executive positions

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        As noted above, our board has a presiding director. If the chairman of the board is independent, then the chairman will be the presiding director. If the chairman is not independent, as is the case with Mr. Berges, then the independent directors are required to designate an independent board member to serve as presiding director. The independent directors have designated Ms. Derickson to serve as presiding director. The responsibilities of our presiding director include the items listed below. Some of these responsibilities are performed by Ms. Derickson, at least in part, in her capacity as the Chair of the nominating and corporate governance committee.

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Chairs meetings of the board in which there is a potential conflict of interest with the Chairman, and acts as a liaison between the other directors and the chairman on sensitive issues



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Oversees the flow of information to the board



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Determines the agenda for board meetings with input from management and other directors



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Oversees the board's performance evaluations of the CEO and provides feedback directly to the CEO



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Supervises the board and committee annual self-evaluation process



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Chairs executive sessions of the board and meets with the CEO to discuss matters of board concern



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Collaborates with the nominating and corporate governance committee in monitoring the composition and structure of the board and leads director recruitment efforts

        The independent directors are required under our corporate governance guidelines to meet in executive session, without management, a minimum of two times a year.

Risk Oversight

        The board is responsible for overseeing Hexcel's risk management. The board sets our risk management strategy and our risk appetite and ensures the implementation of our risk management framework. Specific board committees are responsible for overseeing specific types of risk. Our audit committee periodically reviews our insurance coverage, currency exchange and hedging policies, tax exposures and our processes to ensure compliance with laws and regulations including the Sarbanes-Oxley Act, and also reviews reports from complianceline, our anonymous hotline that employee can use to report suspected violations of our Code of Conduct. The audit committee also regularly meets in executive sessions with our director of internal audit and our independent registered public accounting firm, without management present, to discuss if there are areas of concern of which the board should be aware. The board, and when specific need arises, the finance committee, addresses significant financing matters such as our capital structure, credit facilities, equity and debt issuances, acquisitions and divestitures, and liquidity. Our compensation committee establishes compensation policies and programs that do not incentivize executives and employees to take on an inappropriate level of risk. Each of our board committees delivers a report to the board, at the next board meeting, regarding what transpired at any committee meetings that have taken place since the last board meeting.

        Our Corporate Controller meets periodically with our operations leadership teams to discuss and review the risks that exist in connection with our business. Management makes regular presentations to the board, no less than two times per year (and more frequently if circumstances warrant), regarding all types of material risks facing the company. At these meetings the board discusses and reviews these risks and determines what, if any, new actions should be taken to mitigate these risks.

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Contacting the Board

        Stockholders and other interested parties may contact the non-management members of the board or the presiding director by sending their concerns to: board, c/o Corporate Secretary, Hexcel Corporation, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, CT 06901; facsimile number (203) 358-3972; e-mail address boardofdirectors@hexcel.com. The Corporate Secretary will review all communications and forward them to the presiding director. The Corporate Secretary may, however, filter out communications that do not relate to our business activities, operations or our public disclosures, but will maintain a record of these communications and make them available to the presiding director. Any communications received by the presiding director regarding concerns relating to accounting, internal accounting controls or auditing matters will be immediately 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.

Code of Business Conduct

        It is our policy that all of our officers, directors 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 in order to clarify, disseminate and enforce this policy. The Code applies to all of our officers, directors and employees worldwide, including our chief executive officer, chief financial officer and controller. The Code can be viewed on the investor relations section of our website, www.hexcel.com, under "corporate governance." In addition, you may obtain a free copy of the Code by directing your request to Hexcel Corporation, Attention: Investor Relations Manager, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, CT 06901, telephone (203) 352-6826. 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 Hexcel's Chief Executive Officer, Chief Financial Officer or Corporate Controller, will be promptly disclosed on the investor relations section of our website under "corporate governance."

EXECUTIVE OFFICERS

        Set forth below is certain information concerning each of our current executive officers. For additional information concerning Mr. Berges, see "Election of Directors—Information Regarding the Directors" on page 4.

        NICK L. STANAGE has served as President since November 2009. Prior to joining Hexcel, Mr. Stanage was President of the Heavy Vehicle Products group at Dana Holding Corporation from December 2005 to October 2009, and served as VP and GM of the Commercial Vehicle group at Dana

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from August 2005 to December 2005. Dana Holding Corporation and a number of its US subsidiaries filed for bankruptcy protection in March 2006, and emerged from bankruptcy in January 2008. From 1986 to 2005, Mr. Stanage held a variety of technical, marketing and management positions with Honeywell Inc. (formerly AlliedSignal Inc.), including VP and GM of the Engine Systems & Accessories business unit in the aerospace group from January 2005 to August 2005, and VP Integrated Supply Chain & Technology of the Consumer Products Group from 2003 to January 2005. Prior to joining AlliedSignal, Mr. Stanage worked as a design engineer for Clark Equipment Company.

        WAYNE C. PENSKY has served as Senior Vice President and Chief Financial Officer since April 2007. Prior to serving in his current role, Mr. Pensky served as Vice President, Finance and Controller of our Composites global business unit since 1998. From 1993 to 1998 Mr. Pensky was our Corporate Controller and Chief Accounting Officer. Prior to joining Hexcel in 1993, Mr. Pensky was a partner at Arthur Andersen & Co., where he had been employed since 1979.

        IRA J. KRAKOWER has served as Senior Vice President, General Counsel and Secretary of Hexcel since September 1996. Prior to joining Hexcel, Mr. Krakower served as Vice President and General Counsel to Uniroyal Chemical Corporation from 1986 to August 1996 and served on the board and as Secretary of Uniroyal Chemical Company, Inc. from 1989 to 1996.

        ROBERT G. HENNEMUTH has served as Senior Vice President, Human Resources since March 2006. Prior to joining Hexcel, Mr. Hennemuth served as Vice President—Human Resources of Jacuzzi Brands, Inc. from July 2003 to September 2005. Previously, he was employed by Honeywell International, formerly known as AlliedSignal Inc., where he served as Vice President of Human Resources & Communications for various businesses from December 1996 to June 2003, including Honeywell Consumer Products Group.

        ANDREA DOMENICHINI has served as Vice President, Operations of Hexcel since January 2007, and served as Vice President, Operations of the former Hexcel Composites business unit from November 2001 through December 2006. Mr. Domenichini served as Head of Hexcel's Matrix Systems Business from October 1997 through October 2001. Prior to joining Hexcel in 1996, Mr. Domenichini held various managerial positions with Hercules Incorporated from 1973 to May 1996, the latest being Managing Director of Hercules Aerospace Spain.

        KIMBERLY A. HENDRICKS has served as Vice President, Corporate Controller and Chief Accounting Officer since September, 2009. Ms. Hendricks served as Vice President and Corporate Controller of International Flavors and Fragrances Inc. from July 2007 until July 2009, and as Vice President, Finance, of JLG Industries, Inc. from January 2006 through February 2007. From 1999 to 2006, Ms. Hendricks held various positions with Bristol-Myers Squibb Company, the last being Vice President, Finance from 2003 to 2006.

        MICHAEL J. MACINTYRE has served as Hexcel's Treasurer since December 2002 and was Assistant Treasurer from October 2000 to December 2002. Prior to joining Hexcel, Mr. MacIntyre served as Assistant Treasurer of Hitachi America Capital, Ltd, a US financing subsidiary of Hitachi America, Ltd, a sales and manufacturing company serving the US electronics markets, from 1998 to 2000, and held various treasury management positions with Hitachi America, Ltd. from 1988 to 1998.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Stock Beneficially Owned by Principal Stockholders

        The following table sets forth certain information as of February 28, 2010 with respect to the ownership by any person (including any "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")) known to us to be the beneficial owner of more than five percent of the issued and outstanding shares of Hexcel common stock:

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Stock Beneficially Owned by Directors and Officers

        The following table contains information regarding the beneficial ownership of shares of Hexcel common stock as of February 28, 2010 by our current directors and the executive officers listed in the Summary Compensation Table below, and by all directors and executive officers as a group. The information for the "Number of Shares" was supplied to us by the persons listed in the table.

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COMPENSATION DISCUSSION AND ANALYSIS

        This section describes and analyzes the material elements of 2009 compensation for our executive officers identified in the Summary Compensation Table on page 41. We refer to these individuals as the named executive officers, or "NEOs." The compensation committee of the board of directors is responsible for determining the compensation and benefits of the NEOs, including salary, incentives, equity grants, benefits, perquisites, and other agreements and arrangements that have a compensation component. The committee's approval of the compensation of our CEO is subject to ratification by our independent directors.

Compensation Objectives and Policies

        The committee strives to establish a compensation and benefits program that will enable us to attract, retain and motivate a high caliber of executive talent. The principal guidelines we follow in establishing this program are:

•

Our compensation should be competitive in the marketplace in which we compete for talent. We strive to provide total compensation between the median and 75th percentile of compensation for executives in a group of companies in similar or related industries, taking into account the sizes of the companies, which we define as a "comparator group" of peer companies.



•

Compensation should reflect the level of job responsibility and be related to individual and company performance. Since the performance of our NEOs greatly impacts our results, a significant portion of their compensation should be variable and based on performance.



•

Although our programs tie total compensation to individual and company performance, the twin objectives of pay-for-performance and retention of executive talent must be balanced. We believe competition for executive talent is vigorous, particularly in the advanced materials, commercial aerospace and defense industries. Our compensation programs should ensure that successful, high-achieving executives will remain motivated and committed to us even during periods of downturns and the resulting temporary impact on the performance of our business.



•

Our compensation program should encourage long-term focus while recognizing the importance of short-term performance. Executives at the highest level should have an appropriate portion of their compensation dependent upon our long-term performance.



•

We establish specific programs where we feel it necessary to remain competitive such as by providing benefits upon retirement or upon other separation from service.



•

We regularly track changes in competitive executive pay levels and practices and closely monitor potential regulatory changes and policy guidelines developed by governance groups pertaining to executive compensation. Any changes will be carefully considered in the context of our business and talent needs in planning for our ongoing executive compensation programs.



•

Our compensation programs are forward-looking. We do not determine current compensation on the basis of prior compensation or gains realized from equity awards. Our compensation-setting processes do, however, include a review of compensation history. We believe it is important to annually review total compensation through the use of tally sheets which include projected payments under existing compensation programs as well as under various termination scenarios such as retirement, involuntary termination and upon a change in control.



•

We align executive and shareholder interests by requiring executives to own our stock.



•

We review our compensation programs to ensure they do not encourage excessive risk taking. We structure our pay to consist of both fixed and variable elements. Our stock option awards vest over three years and are only valuable if our stock price increases over time. We cap our

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bonus payout at two times the target amount. We use an appropriate mix of short and long term performance metrics and personal objectives in formulating our MICP and PSA payout schemes.

•

We do not provide our CEO or President with executive perquisites and provide limited executive perquisites to other named executive officers.



•

Our board of directors, which is independent other than for our CEO, has adopted and implements appropriate corporate governance practices, including oversight of enterprise risk management



•

We have adopted a policy regarding executive misconduct, which provides for the "clawback" of performance-based or incentive compensation in the event an executive's misconduct results in the inaccurate reporting of our financial results

        The global economic and credit crisis that became evident in late 2008 continues to present many challenges including finding appropriate ways to maintain our compensation philosophy in the face of severe production cutbacks by our largest customers which have put intense pressure on our performance. As a result of having invested heavily in carbon fiber capacity expansion but without the expected near term earnings returns, we did not achieve the threshold performance level of return on net capital employed ("RONCE") for our performance share award ("PSA") program for the two-year performance period 2008–2009, which was established in January 2008 amidst a period of major capital expansion and before the economic crisis became apparent. As a result, no award shares were issued under this program. In addition, many of our outstanding stock options are underwater. The committee did not consider lowering the 2008-2009 RONCE target or re-pricing underwater options. Although this crisis will continue to impact short term results, we believe that our long-term strategy is sound and that its success depends on retaining the support of knowledgeable employees who remain motivated by long term rewards aligned with shareholder interests. The committee will continue to be forward-looking in establishing compensation programs that reward the achievement of company goals without taking imprudent risks. We do not believe that our compensation programs are structured to reward inappropriate risk-taking for several reasons:

•

we use a variety of incentive performance measures, such as EBIT, net income, cash flow and RONCE, which discourages management from focusing solely on a single financial, operational or corporate goal for reward



•

a large portion of compensation is delivered to executives in the form of equity awards which generally vest over a three-year period, and tend to focus our executives on long-term success rather than short-term results



•

we agree to, and review, non-financial strategic personal objectives for our NEOs, and factor performance as measured against these objectives into our pay decisions



•

we have adopted stock ownership guidelines, which serve to align the interests of our NEOs with those of our shareholders, and encourage focus on long term performance



•

we employ foreign exchange hedging strategies and interest rate swaps, but we do so only to the extent tied to actual sales and manufacturing activity and outstanding debt, and not for speculative purposes



•

we engage independent compensation consultants to guide us in making compensation decisions



•

our board of directors, which is independent other than for our CEO, has adopted and implements appropriate corporate governance practices, including oversight of enterprise risk management

        The global economic and credit crisis apparent in 2008 influenced our choice of incentive performance measures in 2009. For our 2009 annual cash bonus program (Management Incentive

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Compensation Plan, or "MICP"), we chose cash flow as one of the performance measures (weighted 50%), along with adjusted EBIT (weighted 25%) and adjusted net income (weighted 25%). This reflected our belief that in uncertain economic times and in an environment of tightening credit, the generation of cash should be a principal financial goal to underpin corporate sustainability. We also received significant feedback from the investment community indicating that, in these uncertain economic times, cash flow is a major concern. The same MICP design was retained for 2010, as a full recovery to prior business conditions in our primary markets is not expected to occur by the end of 2010. In addition, this combination of different performance measures results in management focusing on both cash and earnings. In a challenging environment these two performance measures tend to move in opposite directions and act as a natural hedge against large swings in market dynamics.

        We also changed our PSA program in 2009, in that we established a three-year performance period (2009–2011) to align with our medium term business plan, while providing an opportunity to earn awards in each of the performance years under an alternate measure since the financial crises made it difficult to objectively set a cumulative three year RONCE goal on which any award would depend. This is described in detail on page 31. We retained the same PSA design for the three-year performance period 2010–2012.

The Compensation Committee's Processes

        The committee operates under a written charter approved by the board and reviewed by the committee annually. The charter provides that the committee is accountable for overseeing, reviewing and approving our compensation and benefit plans and programs and for defining the goals of compensation policy. The committee reviews and approves the compensation of the NEOs on an annual basis, including incentives and equity grants. The committee also reviews annually the benefit plans applicable to all of our employees, including the NEOs.

        The committee has established a number of procedures to assist it in aligning our executive compensation program to meet its objectives:

        Compensation Consultant.    The committee selected and retains an independent compensation consultant, Semler Brossy Consulting Group, LLC ("Semler Brossy"), to assist it in establishing and reviewing executive compensation. Semler Brossy is engaged by and reports directly to the compensation committee. The committee has the sole authority to approve the consultant's fees and the other terms of engagement.

        The committee instructs the consultant to provide advice and recommendations to best serve the company, with the objective of creating long-term value for shareholders. The committee instructs the consultant to periodically inform the committee of compensation-related developments that may influence the committee's decision-making processes. The consultant also is expected to communicate regularly with management to understand the company's business environment, talent needs, and compensation considerations (from the perspective of both the committee and management). Prior to committee meetings, the consultant confers with the committee chair regarding the matters to be discussed at the meeting, and confers with management on management presentations to the committee. In the event the consultant disagrees with the appropriateness of a proposal of management, the consultant informs the committee and reviews the areas of disagreement. The consultant has not performed, and does not currently perform, work for management outside the scope of the engagement by the committee. If management requests additional work, the consultant must first obtain the approval of the chair of the committee.

        With the consent of the committee our CEO confers with the consultant when developing compensation recommendations for the other NEOs. On behalf of the committee, senior management periodically confers with the consultant on our executive compensation programs and may request the consultant's views regarding modifying or adopting new programs or preparing offers of employment to

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senior executives. The consultant advises the committee regarding competitive compensation practices of our comparator group of companies, as well as general industry survey data obtained from other compensation resources which encompasses a broader and larger group of companies.

        Benchmarking.    Each year the committee specifically reviews performance and authorizes the salaries, incentives and equity grants for the NEOs. In making these determinations the committee considers prevailing compensation practices of the comparator group as well as general industry survey data. The comparator group is comprised of companies which have attributes that, when viewed as a whole, represent a reasonable comparison to us in a number of relevant respects. In particular, the following criteria are considered in selecting our comparator group:

•

Industry, such as aerospace, defense and specialty chemicals



•

Business complexity and international presence



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Companies with whom we compete for investor capital



•

Company characteristics such as revenues, numbers of employees, market capitalization and geographic location

The comparator group is selected by the committee based on recommendations by our consultant with input from management on the relevance of potential peer companies to our company. The peer companies are reviewed annually for an assessment of their continued relevance to the company. In 2008 the committee requested, and its former compensation consultant provided, a review and analysis of the comparator group used for determining 2009 compensation, so that the committee could consider whether any companies should be added or deleted from the group. The committee decided to remove Rockwell Collins and to add Arch Chemicals and Teledyne Technologies. This decision was based on the relevance, or lack thereof, of these companies to our business operations after our restructuring, which included the sale of our electronics, ballistics and general industrial business in 2007 followed by the consolidation of our three prior business units.

        The comparator group companies considered by the committee in determining NEO compensation for 2009 were:

        In establishing appropriate compensation opportunities for NEOs, the committee considers a variety of factors, such as, but not limited to, depth of experience, tenure in position, past performance, internal equity, retention risks, and external benchmarks. We benchmark total pay as well as various components against the comparator group. We target between the median and 75th percentile of the comparator group, taking into account the sizes of the companies. Actual total target pay for each individual NEO falls within the targeted range after adjusting for company size, except for the General Counsel who is positioned slightly above the 75th percentile due to his long tenure with the company and exceptional performance. Several NEOs (including the General Counsel) would fall below the comparator group median if we did not consider the sizes of the companies.

        In late 2008, the committee reviewed available comparator group executive compensation data obtained by Semler Brossy as well as what the data would look like if it were adjusted to account for differences in company size. The committee also reviewed the Towers Perrin General Industry Executive Database, a large, multiple-industry compensation survey. This market survey was not

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prepared specifically for us, and included hundreds of companies in various industries, including aerospace, chemicals, automotive and defense. The committee considered the comparator group data as most relevant and the Towers Perrin data as a reasonable check to provide assurance that the company's compensation practices are similar to those in a broader industry index of companies. We do not benchmark against the Towers Perrin data.

        Use of Company Performance in our Compensation Programs.    We provide the opportunity for both cash and stock incentives based on achievement of individual and company performance measures. Annual cash awards are available under the MICP. PSAs are granted under our 2003 Incentive Stock Plan ("ISP"). PSAs granted in 2008 established a cumulative two-year performance cycle for earning share awards, followed by a one-year service retention period for vesting in the shares. PSAs granted in 2009 are based on both a three-year performance cycle and three one-year performance cycles, as described on page 31. The committee, in consultation with the consultant and senior management, adopts performance measures for earning awards and determines the relationship between achievement of performance and the size of award payable at threshold, target and maximum levels of performance. This resulting plan design reflects the committee's views on the achievability of the performance measures based on the business plan reviewed by the board. The committee believes that consultation with management is important to understanding the relevance of the performance measures, and the specific performance goals, to our overall business objectives in the performance period.

        Use of Individual Performance in our Compensation Programs.    At the beginning of each year we establish individual performance objectives for the CEO for the year and we evaluate the CEO's performance against the objectives for the preceding year. We base the CEO's MICP award opportunity solely on company performance. However, we consider achievement of his individual objectives in deciding whether to exercise negative discretion to reduce his MICP award and in setting his target compensation for the subsequent year. At least twice annually the full board of directors reviews the CEO's performance and the Presiding Director then discusses the board's assessment with the CEO. This assessment includes a review of overall performance of the company, the degree to which strategic objectives were met, leadership accomplishments and other factors deemed relevant to the CEO's performance. Our compensation committee charter requires that all decisions regarding CEO compensation be ratified by our independent directors. The CEO has no role in setting his own compensation.

        Mr. Berges' employment agreement is evergreen for additional one-year periods unless notice is given by us or Mr. Berges of an intention not to extend for an additional year. Each year, prior to the automatic renewal of the agreement, the board affirmatively considers whether or not to extend the term of his employment for an additional year based on an assessment of his performance. In 2009, the board extended Mr. Berges' employment agreement at least to its current expiration date in July 2011.

        At the beginning of each year, the CEO establishes individual performance objectives for the other NEOs and evaluates their attainment of the prior year's objectives and their level of performance as part of an annual performance review. MICP award opportunities for the other NEOs are based 100% on company performance, subject to the committee's authority to exercise negative discretion to reduce an NEO's MICP award. The committee, however, receives the CEO's assessment of each NEO's overall performance (generally and based on attainment of the prior year's individual performance objectives), criticality to business strategy, career potential and retention risk. The CEO makes compensation recommendations for each NEO, including setting compensation for the next year as well as whether to exercise negative discretion regarding the MICP award for the year that just ended, based on various considerations, including these factors. These recommendations are reviewed by Semler Brossy, who advises the committee on the reasonableness of the recommendations relative to competitive norms. While the committee gives appropriate weight to benchmarking data and the CEO's recommendations, the committee also exercises its judgment based on the committee's assessment of the performance of the other NEOs.

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        Total Compensation Review.    As part of the committee's review of the annual target compensation of the NEOs, the committee reviews "tally sheets" for each of the NEOs which reflect other forms of compensation such as deferred compensation, retirement benefits, severance payments and perquisites under various scenarios including termination of employment for death or disability, or by us with or without "cause," or by the executive with or without "good reason," and termination benefits resulting from a change of control (see pages 55–61 for a complete description of benefits and enhancements upon termination). The tally sheets also reflect realized and unrealized amounts from awards of equity incentives.

        Consistent with the committee's views that an executive's compensation should reflect individual and company performance and reflect competitive practices, the compensation previously earned by the NEOs, including realized and unrealized gains under equity grants, is not a determinant in setting compensation for subsequent years. However, the committee does utilize the tally sheet data to understand the impact that compensation actions under consideration could have on future payments on retirement, termination and change in control scenarios. With the assistance of the committee's consultant, the committee also uses the tally sheets to provide assurance that our compensation programs and payments upon termination under various scenarios are reasonable and in line with industry practices.

Components of Executive Compensation for 2009

        For 2009, executive compensation consisted of four primary components—salary, cash incentive bonus, equity awards and a benefits package. The following chart shows the total direct target compensation of the NEOs in 2009, which includes salary, target cash bonus under the MICP, and the grant date value of equity awards. The value of an equity award is determined in the same manner used to determine the values appearing in the last column of the grant of plan-based awards table on page 44. The percentages shown reflect the percentage of total direct target compensation represented by each compensation component for each NEO.

        With respect to each of Mr. Stanage and Mr. Grosman, the executive's salary, cash bonus and equity award was determined as part of a negotiation of the executive's entire compensation package when the executive was hired in 2009. As discussed on pages 45–46, we entered into an executive severance agreement with Mr. Grosman, and an employment and severance agreement with Mr. Stanage, upon each such executive commencing employment with us. We were advised by Semler Brossy in our negotiations with the executive as to competitive positioning, internal equity considerations, and as to the salary, bonus, equity awards and benefits provided for in the agreements with Messrs. Stanage and Grosman.

        Each of these compensation components is described in detail below.

        Salary.    Mr. Berges' salary was increased from $875,000 in 2008 to $905,013 in 2009, an increase of 3.4%. In January 2009, the CEO presented the committee his recommendations regarding salary increases for our other NEOs. The committee approved salary increases for the other NEOs as follows: Mr. Pensky, 5%; Mr. Krakower, 3.5%; Mr. Hennemuth, 3.2%. Mr. Stanage began employment with us

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on November 9, 2009, and Mr. Grosman was employed by us from February 23, 2009 through August 7, 2009. The salaries and target cash bonuses for Messrs. Stanage and Grosman appearing in the above chart reflect annualized values.

Analysis

        The committee sets salaries for NEOs using the comparative data described above under "Benchmarking" as a guide and targets between the median and 75th percentile of the comparator group, taking into account size, but is also influenced by other factors. These include job responsibilities, internal equity among the NEOs, individual performance, retention risk, and experience. In particular, the committee considered the following 2008 accomplishments of the NEOs in approving their 2009 compensation packages, including salary increases (with no particular weighting assigned to any individual factor):

•

Mr. Berges: development of long-term business and capacity strategies for aerospace and wind energy markets; achievement of financial results; penetration into new aircraft programs with long-term growth prospects; organizational development; and improved governance and investor relations.



•

Mr. Pensky: development of accounting, finance and tax staff which has resulted in significant improvement in the timeliness of financial reporting while achieving no significant deficiencies with respect to internal controls; implementation of various tax strategies which resulted, and will continue to result, in substantial tax savings and benefits; increased contact and visibility with analysts and investors.



•

Mr. Krakower: implementation of compliance programs; response to tax-driven matters; successful defense of litigation; overall management of legal matters; significant commercial contract negotiations with major customers; and support of board processes.



•

Mr. Hennemuth: successful advancement of succession planning; recruitment of individuals to fill key executive and operational positions; launching new HR systems and processes; and the improvement of management and organizational development practices.

        Cash Incentive Bonuses.    We maintain the MICP, a shareholder-approved plan, to provide for an annual cash bonus opportunity to select key employees including the NEOs. The MICP aligns employees' incentives with our financial goals for the current year. The bonuses paid for 2009 appear in the Summary Compensation Table under the "Non-equity Incentive Plan Compensation" column. Under the plan, competitively-based bonus target amounts, expressed as a percentage of salary, are established for participants at the beginning of each year by the committee. Bonus awards paid in respect of 2009 for the NEOs were determined exclusively based on the degree of attainment of predetermined objective financial performance measures. The MICP provides for "qualified awards," which are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code, and for "non-qualified" awards that are not qualified under Section 162(m). At the end of the performance period, the committee has discretion to adjust a qualified award downward, but not upward, from the objectively determined level of attainment of the performance measure. Non-qualified awards can be adjusted upward or downward. The MICP gives the committee the authority to make appropriate adjustments in all awards to reflect the impact of unusual, non-recurring or extraordinary income or expense not reflected in the performance measures at the

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time they are set, however no such adjustments were made in 2008 or 2009. The following describes the setting of awards for 2009:

        Bonus Targets.    Bonus targets for 2009 were as follows, based on a percentage of salary:

Analysis

        Mr. Berges' employment contract provides him with an annual target bonus opportunity of at least 100% of his salary, with a maximum opportunity equal to 200% of salary. In approving these percentages for our CEO, the committee concluded that these award opportunities were competitive with the CEO's peers in the comparator group. For each of the other NEOs, the committee considered some or all of the following factors: competitive data in relation to the comparator group, the accomplishments of each NEO in 2008, internal equity among the NEOs based on the CEO's assessment of performance and the importance of each NEO's position to our strategic goals, and tenure in position. The committee did not increase target MICP percentages from 2008 to 2009.

        Company Performance Measures.    In December 2008 the committee established company performance measures for all participants in the MICP including our NEOs (there were 165 participants overall). The measures were free cash flow, measured from September 30, 2008 to December 31, 2009 (weighted 50%), adjusted EBIT (weighted 25%) and adjusted net income (weighted 25%), as discussed below. The fifteen-month period for cash flow was selected in order to eliminate variance that can result from severe fluctuations in the use or conservation of cash at the end of one year and at the beginning of the next year. The mix of performance measures represented a change from 2008, in which the performance measures were adjusted EBIT (weighted 75%) and adjusted net income (weighted 25%). Under the 2009 plan, the maximum payout for each performance sub-measure was 250% of the weighted target award for that performance measure, but in no case could an NEO's total consolidated award exceed 200% of the total target amount.

        "Free cash flow" means cash provided by operating activities of continuing operations less capital expenditures from the consolidated statement of cash flows.

        "Adjusted EBIT" means operating income plus the sum of business consolidation and restructuring expense and other expenses (income).

        "Adjusted net income" means income from continuing operations plus the sum of the after tax impact of gains or losses on the sale of interests in joint ventures, other non-operating expenses (income) and other expenses (income).

        Under the MICP, the committee has the authority to make appropriate adjustments in performance goals to reflect the impact of income or expenses related to unusual, non-recurring or extraordinary events that were not reflected in the goals at the time they are set. Common examples include acquisitions and dispositions, equity or debt financings, and restructurings. There were no such adjustments made in 2008 or 2009.

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        The following chart indicates the portion of an award, as a percentage of target award, at attained levels of free cash flow. Payout at target award level required a free cash flow of zero. No award is payable based on the free cash flow sub-measure if the level attained is below the threshold amount of negative $40.0 million.

2009 MICP Payout Schedule—Portion Based on Free Cash Flow

        The following chart indicates the portion of an award, as a percentage of target award, at attained levels of adjusted EBIT. Nothing is paid based on adjusted EBIT if the level attained is below the threshold amount of $108.9 million.

2009 MICP Payout Schedule—Portion Based on Adjusted EBIT

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        The following chart indicates the portion of an award, as a percentage of target award, at attained levels of adjusted net income. Nothing is paid based on adjusted net income if the level attained is below the threshold amount of $57.1 million.

2009 MICP Payout Schedule—Portion Based on Adjusted Net Income

Analysis

        The committee adopted free cash flow as a performance measure for 2009, reflecting our belief that in uncertain economic times in which our principal markets are suffering a downturn, improved cash flow should become a principal financial goal. The committee retained adjusted EBIT and adjusted net income as additional performance measures for 2009 as we wanted to maximize our earnings, but increasingly our investors were concerned about cash flow, in particular because we had negative cash flow of over $78 million dollars in the prior year. While the market outlook and thus earnings potential was difficult to predict in early 2009, cash flow was deemed a target that could be achieved through management focus and effort. We wanted to reward behavior such as tight inventory management, aggressive collections, prudent capital spending and effective cost control. In addition, all three of these measures can be readily derived from the company's audited consolidated financial statements. This combination of different performance measures results in management focusing on both cash and earnings. In a challenging environment these two performance measures tend to move in opposite directions and act as a natural hedge against large swings in market dynamics.

        In setting the objective performance targets we considered the company's target performance under the 2009 business plan reviewed by the board and the scaling of potential awards at different achievement levels of free cash flow, adjusted EBIT and adjusted net income. For achieving each of these performance metrics at a level over target, we believe it is appropriate to leverage the awards to recognize superior performance. Despite the uncertain economic climate and the difficulty in predicting the demand for our products in 2009, we set target levels for adjusted EBIT and adjusted net income above our actual 2008 results, which were the highest in the company's history. We required substantial increases over 2008 actual results to achieve the maximum payout levels. In particular, a 7.3% growth in adjusted EBIT from $145.0 million in 2008 was required in order to achieve the 2009 target adjusted EBIT of $155.6 million, and a 34.1% increase from 2008 adjusted EBIT was required for a 2009 maximum award at adjusted EBIT of $194.5 million. A 2.3% growth in adjusted net income from $79.7 million in 2008 was required in order to achieve the 2009 target adjusted net income of

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$81.5 million, while a 27.9% increase from 2008 adjusted net income was required for a 2009 maximum award at adjusted net income of $101.9 million.

        Similarly, in setting free cash flow performance targets we required significant improvement from our free cash flow in 2008 of negative $78.4 million in order to reach the target and maximum payouts based on free cash flow for the period September 30, 2008 to December 31, 2009. Payout at the target level required a net free cash flow of zero, while payout at the maximum level required free cash flow of $40 million.

        Individual Performance.    As discussed under "Use of Individual Performance in our Compensation Programs" on page 21, in 2009 the committee decided that, like the CEO, each other NEO's MICP bonus opportunity should be based exclusively on objective financial performance measures.

Analysis

        The decision was based on: (1) the belief that the NEOs' performance significantly impacts the company's financial performance, and therefore their MICP awards should be based upon such results; (2) the opportunity to achieve tax deductibility of NEO awards under Section 162(m) of the Internal Revenue Code, and (3) the belief that excluding the individual component from the MICP calculation does not materially impact the CEO's or the committee's ability to negatively adjust an award or to determine compensation in a subsequent year based on an NEO's degree of achievement of individual objectives.

        Cash bonuses awarded for 2009.    Using the MICP charts above, in January 2010 the committee certified the degree of attainment of the financial measures after performing appropriate due diligence. Our adjusted EBIT for 2009 was $111.0 million, which resulted in an award payout of 52.4% of target for that portion of the award based on adjusted EBIT. Our adjusted net income for 2009 was $61.9 million, which resulted in a 60.3% of target award payout based on adjusted net income. Our free cash flow for the period September 30, 2008 to December 31, 2009 was $78 million, which resulted in an award payout of 250.0% of target for that portion of the bonus based on cash flow. This resulted in a combined payout of 153.1% of target MICP award for each NEO, which was also the baseline award level for all other participants in the MICP.

Analysis

        Once the combined 153.1% of target award was objectively determined, the committee considered whether to use negative discretion to reduce any award. The committee assessed the individual performance of each NEO in 2009 against the individual performance objectives established for each NEO at the beginning of 2009, and decided not to exercise negative discretion.

        Equity Incentives.    We make awards of equity incentives to participants in the Incentive Stock Plan ("ISP"), our general plan that provides for the granting of various stock-based awards, on an annual basis. In 2009 there were 167 participants in the ISP. On occasion we make individual awards when special recognition is warranted. In 2009, we used three forms of equity incentives granted to the NEOs under the ISP: non-qualified stock options ("NQOs"), Restricted Stock Units ("RSUs") and PSAs. In its meeting in January 2009, the committee approved the dollar value of each NEO's aggregate equity award for 2009 as a percentage of the NEO's salary for 2009, and the forms in which the awards would be granted: 50% of total award value in NQOs, and 25% of total award value in each of RSUs and PSAs. On January 26, 2009, the grant date for such awards specified by our equity award policy (which is described below on page 29), the dollar values were converted into a number of NQOs, RSUs and PSAs based on the valuation methodology used by us to determine accounting expense for the fair value of the awards under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. The RSUs and PSAs were valued, for each share they represented, at the closing price of our common stock on the NYSE on January 26, 2009 ($7.83). The NQOs awarded

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to NEOs were valued at $4.08 for each share based on a Black-Scholes value determined as 52.1% of the closing price of a share.

        The value of each executive's equity awards, expressed as a percentage of 2009 salary, was 255% for Mr. Berges; 187% for Mr. Stanage; 160% for Mr. Pensky; 140% for Mr. Krakower; 130% for Mr. Hennemuth and 200% for Mr. Grosman. These percentages were the same in 2009 as they were in 2008 for each of Messrs. Berges, Krakower and Hennemuth. Mr. Pensky received an equity award equal in value to 170% of his salary in 2008. Mr. Pensky's target equity award was higher in 2008 due to an exceptionally strong start as our new CFO and our desire to help him achieve his new ownership guidelines. With respect to Messrs. Stanage and Grosman, the percentages for 2009 were set forth in the employment and severance agreement (in the case of Mr. Stanage) and the executive severance agreement (in the case of Mr. Grosman) entered into in connection with the commencement of the executive's employment.

Analysis

        These equity incentives foster the long-term perspective necessary for continued success in our business. They also align the interests of our NEOs with shareholder value and are an important element of our goal to be competitive with peer companies. Consistent with our compensation philosophy NEOs received a greater proportion of total pay in the form of equity than other participants in our equity program.

        The committee reviewed a variety of factors to determine if our long-term target incentive percentages for our NEOs were competitive with our peers and appropriate with respect to our shareholders. In addition to performing a general review and assessment of the comparator group data presented by Semler Brossy, the committee compared our equity award "burn rate" and "overhang" to data supplied by Semler Brossy on competitive practices. Since our methodology for determining the number of equity awards granted begins with a dollar amount, the number of awards granted increases with declining share price and decreases with increasing share price. The committee was mindful that the company's share price declined dramatically from $21.11 a year earlier to about $7.00. As a result, the number of shares potentially issuable increased significantly year over year. However, the committee considered that as a long-term incentive, the movements in share price and corresponding number of shares issuable would average over the course of an executive's career with us to a normative annual number of shares. The committee also believes that delivering a consistent grant date value of equity awards improves the retentive impact of awards and also aligns the company's executive compensation strategy with the company's expected long-term growth and multi-year business cycle. Our policy of granting equity awards on an annual basis, and its price averaging effect, minimize the need to consider option re-pricing or other similar type adjustments. The committee noted that even at an assumed lower share price of $7.00 for 2009 the resulting average burn rate and overhang for 2007-2009 would be 1.5% and 6.9%, respectively, which compared to the peer group's 1.3% burn rate for 2005-2007 (the only publicly known data the committee could identify) and the peer group's 12.3% overhang for 2007-2009. The committee also reviewed the potential dilutive impact of equity awards on earnings. In addition, the committee considered the company's strategic positioning in its major markets, aerospace and wind energy. The company's long-term growth prospects in these markets were essential to its strategic plan and were not diminished by the global economic downturn in late 2008; among the key elements of the plan were the A350 contract (the largest in the company's history), capacity expansions, continuing research and technology work to remain competitive in securing positions on new aerospace programs, and managing leverage in a difficult credit environment. Although the 2009 business plan would necessarily be tempered by the global economic downturn, the committee believed that delivering reduced grant date values by granting fewer issuable shares would result in an inappropriate loss of retentive and incentive value of the equity awards to the company and could negatively impact its long-term strategic plan. On the grant date for 2009 awards the share price was $7.83.

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        The committee also determined the forms in which the awards would be granted: 50% of total award value in NQOs, and 25% of total award value in each of RSUs and PSAs. This mix of awards was intended to provide our most senior executives with performance-based incentives of greater perceived value for delivering results in a challenging business environment. Consideration was also given to the historically lower-perceived value of PSAs.

        As stated earlier, in addition to the comparative data described under "Benchmarking" on page 20, the committee considers other factors in setting NEO compensation such as job responsibilities, internal equity among the NEOs, individual performance, retention risk and experience. These considerations can result in modest fluctuations of award levels year to year.

Equity Award Policy

        Under our equity award policy:

•

The grant date for annual equity awards to employees is the third full trading day after we issue our year-end earnings release



•

The grant date for equity awards to directors is the date of initial election and/or re-election to the board



•

The grant date of any other award, such as for a new hire award or a special recognition or retention grant to an existing employee or director, is the third trading day following the first date on which financial results for a quarter are publicly disclosed following the date the award was authorized



•

The exercise price of a stock option shall not be less than the closing price of our common stock on the NYSE on the date of grant



•

Equity awards shall be valued in the same manner for compensation and accounting purposes—in accordance with FASB ASC Topic 718 as of the grant date



•

All awards must be in the form of a specified number of shares or a dollar amount or percent of base pay approved along with a pre-defined algorithm by which the number of shares can be calculated with certainty on the grant date



•

Equity awards may only be authorized by the board or the compensation committee or by an equity grant committee, if specifically authorized by the board or the compensation committee



•

Each authorization of granting authority to the equity grant committee must state the aggregate maximum number of shares, the relevant period, the eligible recipients, and the maximum number of shares that may be granted to any single person; in addition, the compensation committee must be informed of all awards made by the equity grant committee each quarter



•

The compensation committee has the discretion to authorize grants outside the policy when circumstances warrant

        We chose to value equity grants and to set the exercise price of an NQO on the third trading day after we next release earnings following a grant authorization to allow the public market an opportunity to digest our most recent financial results and establish the fair market value of a share of our common stock on the date of grant.

        In May 2009 the committee authorized the equity grant committee, which is composed solely of our CEO, to grant equity awards to non-executives during the remainder of 2009 for new hires, retention and special recognition. This authority was granted for up to 50,000 shares, but no individual award could exceed 10,000 shares.

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Stock Options

        NQOs provide for financial gain derived from the potential appreciation in stock price from the date that the NQO is granted until the date that the NQO is exercised. The exercise price for our NQO grants is set at the closing price of our common stock on the NYSE on the grant date. Our long-term performance ultimately determines the value of NQOs, as gains from NQO exercises are entirely dependent on an increase in our stock price. NQOs granted generally vest and are exercisable at the rate of one-third on each of the first three anniversaries after the grant date and expire ten years from the grant date.

        All NQOs issued to ISP participants since 2005, and NQOs issued to our NEOs prior to 2005, provided for a three-year period to exercise vested NQOs after retirement. "Retirement" for this purpose is defined as age 65, or age 55 with five or more years of service. Effective January 1, 2009, we extended this three-year period to five years for all outstanding NQOs and for all NQOs on a going forward basis.

        The income of an NEO attributed to the exercise of our NQOs is considered performance-based compensation under Section 162(m) of the Internal Revenue Code, so we are generally permitted to deduct, on an unlimited basis, the compensation expense associated with any such income.

Analysis

        Because financial gain from NQOs is only possible after the price of our common stock has increased, we believe grants encourage NEOs and other employees to focus on behaviors and initiatives that should lead to a longer-term increase in the price of our common stock, which aligns the interests of our NEOs and employees with those of our shareholders.

        The committee determined that NQOs granted by the company should provide for a longer post-retirement exercisability period for all NQO recipients, including named executive officers. We did this because we want our senior leaders who are approaching retirement to remain focused on the long term health of the company, and because the impact on our financial results of many of our most important efforts, such as winning a material position on a new aircraft, is not realized for years. The company accounts for NQO expense as though NQOs are exercisable for an expected term, which is based on historical patterns regarding how long employees have held NQOs before exercising them. Accordingly, there is no expense incurred as a result of the change to the post-retirement exercisability period. The committee considered whether this change might negatively impact the retentive element of the company's NQOs by encouraging earlier retirement, and determined that extending the post-retirement exercisability period would just as likely result in a decision to defer rather than to accelerate retirement.

Restricted Stock Units

        RSUs represent units that generally vest and convert into shares of our common stock on a one-to-one basis at the rate of one-third on each of the first three anniversaries of the grant date or at some other schedule of vesting. Since RSUs are valued at the closing price of common stock on the date of grant, a grant of equity award value in the form of RSUs results in the issuance of fewer shares and less dilution than would result from providing the same value in the form of NQOs.

        Our annual awards of RSUs do not qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code, and so may not be deductible to the extent that an NEO's aggregate compensation, other than performance-based compensation, exceeds $1 million in the year in which the RSUs vest.

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Analysis

        Unlike NQOs, which have no value if the stock price does not increase from the date of grant, RSUs have value so long as the stock is not worthless. RSUs therefore have a retentive feature that should ensure that successful, high-achieving employees will remain motivated and committed to us despite temporary downturns in the stock market. Because a higher stock price increases the value of RSUs, we believe that, similar to the case with NQOs, grants encourage NEOs and other employees to focus on behaviors and initiatives that should lead to an increase in the price of our common stock, which aligns the interests of our NEOs with those of our shareholders. RSUs are also an important vehicle to assist newly hired or promoted NEOs achieve their ownership guidelines.

Performance Share Awards

        PSAs provide an opportunity to receive shares of our common stock depending upon a measure of our performance over a multi-year period and provide for a threshold, target and maximum number of shares that can be earned over the performance period. The maximum number of shares that can be earned is 200% of target. For 2008 PSAs, the performance period was two years, and the shares were to vest and be distributed to the grantee only if the grantee completed a third year of service. As discussed below, the minimum threshold level of performance was not achieved for the 2008 PSAs, and therefore no shares will be issued under this program. For 2009 PSAs, the performance period is three years, and the grantee generally must remain with us for the full three-year period in order to have the opportunity to receive an unreduced number of shares to which he otherwise would be entitled. For both 2008 and 2009 PSAs, awards are pro-rated upon certain terminations prior to the end of the full three-year period.

Analysis

        PSAs strengthen the connection between company performance and equity grants. If we fail to achieve the threshold level of performance, the PSAs have no value, and if we achieve above-target performance, the PSAs increase in value. PSAs also help us retain and motivate our executives and key employees including during temporary downturns in our performance. Unlike NQOs, accounting rules allow us to recover the accrued cost if PSA minimums are not reached and they become worthless.

        PSA grants encourage NEOs and other employees to focus on improved medium-term financial performance and a long-term increase in the price of our common stock. The medium-term performance determines how many shares are earned over the performance period, and our long-term performance increases the value of the shares. This serves to align the interests of employees with those of our shareholders.

2009-2011 PSAs

        We changed our PSA program in 2009. In 2008, performance shares were earned over a two year performance period depending on achievement of RONCE, followed by a one year service retention period for vesting. In 2009 we established a three year performance period and determined that the number of shares awarded at the end of the three-year performance period will be the greater of (i) the shares earned based on achievement of three-year RONCE and (ii) the sum of the shares earned based on achievement of separate performance measures for each of the three years in the performance period. However, if the threshold performance level for three-year RONCE is not met, then the amount of any shares earned based on yearly achievement will be reduced 25%. The yearly performance measures, and the threshold, target and maximum levels of payout, as well as all other terms for determining the annual earned share amounts for each year under the PSA program, will be exactly the same as those adopted under MICP for the corresponding year—for 2009 the performance measures are free cash flow, adjusted EBIT and adjusted net income, as stated above.

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        For our 2009 PSA program, RONCE is defined as the average return for 2009, 2010 and 2011 divided by the average capital employed as of December 31, 2008, 2009, 2010 and 2011, where:

•

Return generally means operating income, adjusted for other expense (income), and



•

Capital employed generally means shareholder equity plus net debt.

        The following chart indicates the scaling of awards for the 2009-2011 period, as a percentage of target award, at various levels of attained RONCE:

2009-2011 PSA
Payout Schedule

        

        The structure of the 2009-2011 PSAs requires a threshold level of performance before any payout is earned. As the chart shows, depending on achievement there are threshold (50% of target award), target (100% target award), stretch (125% of target award) and maximum (200% of target award) award levels.

        Since, as indicated above, the payout under our MICP for 2009 was 153.17% of the target MICP award, the shares that have been provisionally earned so far for each participant under the 2009-2011 PSA program—based on our performance in the year 2009—is equal to 51.06% of the three-year target amount of shares. This result is obtained by taking one-third of the three-year target award under the PSA program and multiplying it by 153.17%. However, the final 2009-1011 PSA award will not be determined until after 2011. If we fail to meet the threshold level for the three-year RONCE achievement, then the total of the provisionally earned shares based on annual achievements for 2009-2011 will decrease by one-fourth. In no event can the award of PSA shares exceed 200% of target award.

        Under the PSAs, upon termination of employment due to death, disability or retirement, or upon termination of the employee without cause or, in the case of our NEOs, by the executive for good reason, the employee is entitled to receive a pro-rata portion, based on time employed during the performance period, of the earned award.

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2009-2011 PSAs—Analysis

        We established a three year performance period to align with our medium term business plan. We provided an alternative opportunity to earn shares in each of the performance years since the financial crises made it difficult to objectively set a cumulative three year goal on which any award depended. By providing alternative paths to earning performance shares, the 2009 PSA program has the advantage of allowing us flexibility to set annual goals in response to a changing economic climate while maintaining the objective of achieving the three-year goal. We believe this will result in significant motivational and retentive value to the company during this period of unpredictability.

        The committee adopted RONCE as the performance measure for the 2009-2011 PSAs for various reasons. RONCE can be readily derived from the company's audited consolidated financial statements. Also, in our capital intensive business, it is important to provide an incentive for the efficient utilization of our net assets and to motivate improvement in the return that we earn on these net assets.

        Target levels were established by the committee in late 2009 based on the medium term business plan for 2009-2011. The target levels chosen were challenging, yet attainable, giving consideration to

•

The company's planned capital investments in new manufacturing plants and capacity during the medium term plan, giving consideration to the fact that, in the aerospace industry, there is a substantial time lag between the investment of capital and the realization of a return on such capital investment



•

The lack of visibility to future growth assumptions given the global economic turmoil



•

Our objective of achieving an adequate return on capital given the current uncertain and challenging economic and business environment

        As shown by the graph above, a fixed increase in RONCE between target and stretch results in a lesser enhancement in payout than the enhancement that would result from the same increase between threshold and target. Similarly, a fixed increase in RONCE between threshold and target performance results in a lesser enhancement in payout than the enhancement that would result from the same increase between stretch and maximum. This payout structure was adopted to reflect that once target, and then stretch, levels are obtained, it is more difficult to increase operating income as a percentage of capital employed and a greater reward is justified.

Payout of 2008-2009 PSAs

        RONCE was also the financial measure adopted for the 2008-2009 period. The rationale for using RONCE was the same as for the 2009-2011 period but with no anticipation of the global economic and credit crisis to come. The payout structure was similar to that used for the payout structure based on RONCE for the 2009-2011 PSAs. The threshold level of RONCE was 19.5%, target RONCE was 22.5%, and the maximum payout would be achieved at 25.5% RONCE. Because our major capital expansion program to support anticipated growth in the wind energy and commercial aerospace markets was followed by reduced earnings, the resultant attained RONCE of 15.7%, as certified by the compensation committee, was below the minimum threshold that had been set and resulted in a zero payout for all participants including the NEOs.

        Benefits and Retirement Plans.    Our employees are offered participation in a variety of retirement, health and welfare, and paid time-off benefit plans which generally are comparable to plans offered by other employers in the markets from which we recruit our workforce. These benefits ensure that we can offer competitive benefits and promote employee well-being and retention. Our NEOs may participate in these plans to the same extent as our other employees. These plans may be tax-qualified or otherwise subject to tax and regulatory regimes of the jurisdiction in which employees are located. These legal requirements may limit benefits payable under the plan or impose adverse consequences if

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benefits are paid based on compensation above certain levels. We offer to supplement these benefits where these and other considerations are important to maintaining competitive benefits. Our NEOs receive the following supplemental benefits:

•

Our NEOs are eligible to participate in the nonqualified deferred compensation plan described on page 53 under "Nonqualified Deferred Compensation in Fiscal Year 2009"



•

We have entered into the following supplemental retirement agreements with our NEOs, which are described on page 49 under "Pension Benefits in Fiscal 2009":



•

supplemental executive retirement agreements ("SERPs") with Messrs. Berges, Stanage and Krakower (we entered into a SERP with Mr. Grosman as well)



•

executive deferred compensation arrangements ("EDCAs") with Messrs. Pensky and Hennemuth



•

We provide a death benefit for each of our NEOs while employed by us equal to two times the sum of (i) the NEO's salary on the date of death and (ii) the average of the annual cash incentive bonuses paid to the NEO in the two years prior to death. The death benefit provided to Mr. Berges and Mr. Stanage is limited to $1,500,000. This benefit is in the form of insurance paid by us up to a maximum insured amount of $1,500,000 for Messrs. Berges and Stanage and $750,000 each for Messrs. Pensky, Krakower and Hennemuth. With respect to Messrs. Stanage, Pensky, Krakower and Hennemuth, to the extent the death benefit exceeds the maximum insured amount we will make a payment to the estate of the NEO for the excess amount (limited, in Mr. Stanage's case, to the difference between $1,500,000 and the maximum insured amount).

Our cost of providing the supplemental death and insurance benefits to our NEOs is reflected in the "All Other Compensation" column of the Summary Compensation Table on page 41 and are described in more detail in footnote (7) to that table.

        Our qualified 401(k) Plan allows substantially all US employees to contribute up to 20% percent of their cash compensation (salary and bonus under the MICP). There is an aggregate limit on total annual contributions (whether by the employee or the company) imposed by the Internal Revenue Code (the limit was $49,000 for 2009). The Internal Revenue Code further limits the amount that may be contributed on a pre-tax basis; that amount was $16,500 for 2009 ($22,000 for persons age 50 or older). The plan further provides:

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that employee contributions and earnings thereon are 100% vested at all times.



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for a 50 percent company match on employee contributions, up a maximum of 6% of total cash compensation.



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for a discretionary profit sharing contribution into the plan annually as determined by the compensation committee



•

for a fixed contribution of an additional 2% of each employee's cash compensation each year, or 4% for employees who were 45 years of age on or before December 31, 2000 and employed by us as of such date



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for all matching, discretionary and fixed contributions and earnings to vest at the rate of 20% for each year of service with us—meaning that all contributions are fully vested after five years



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for an array of investment options as selected by plan fiduciaries from time to time



•

for distributions to be made in a lump sum or in a series of monthly, quarterly or annual installments after termination of service

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for loans and in-service distributions under certain circumstances, such as a hardship, attainment of age 59¹/2 or a disability

One of the investment options in the 401(k) plan is a Hexcel stock fund. Senior executives, including all the NEOs, are not permitted to invest in this fund. Other employees may only invest company contributions, and not their own contributions and earnings, in the Hexcel stock fund.

Perquisites

        Neither Mr. Berges nor Mr. Stanage participates in our annual perquisites program (nor did Mr. Grosman). For each of Messrs. Pensky, Krakower and Hennemuth, our perquisites program provides for an annual car allowance of $12,000, and an additional annual allowance of $10,600 (for Messrs. Pensky and Krakower), and $5,600 (for Mr. Hennemuth). The additional allowance may be used for:

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reimbursement of club membership dues



•

expenses incurred for financial counseling and tax preparation



•

premiums for supplemental life and health insurance beyond the standard life and health insurance available to our executives



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reimbursement to the NEO for taxes due on the income recognized by the NEO as a result of receiving these reimbursements (but only to the extent of any remaining balance)

Our cost of providing these perquisites to our NEOs is reflected in the "All Other Compensation" column of the Summary Compensation Table on page 41. The cost is described in more detail in footnote (7) to that table.

        We have agreed to provide Mr. Stanage with certain relocation benefits as set forth in his employment and severance agreement, which was entered into when he commenced employment with us. See page 45 for a description of Mr. Stanage's employment and severance agreement.

Analysis

        These perquisites are not part of an executive's base compensation, and therefore are not a factor in calculating pay increases, bonus payouts, equity awards, retirement benefits or any other program tied to base compensation. We believe that the perquisites we offer to our NEOs are reasonable in amount and are market competitive. The committee and compensation consultant each review our perquisites program annually.

Stock Ownership Guidelines

        Under the company's stock ownership guidelines:

•

the target for compliance is stated in dollar amounts



•

the executive or director is required to reach the target dollar value through ownership of shares of unrestricted common stock and to retain those shares until termination of service; only vested restricted stock units count as shares owned



•

the target dollar value is as follows:

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(1)

All numbers in these columns refer to shares of Hexcel common stock.

(2)

Includes 3,349,182 shares issuable upon the exercise of NQOs, 580,610 shares issuable upon the vesting and conversion of restricted stock units, and 694,908 shares issuable as a result of outstanding PSAs. With respect to PSAs for the 2008-2009 performance period, reflects zero shares to be issued, based on the level of attainment of RONCE (the applicable performance measure) during the 2008-2009 period. With respect to the 2009-2011 period, assumes that we will attain the maximum level of RONCE under the PSAs for the 2009-2011 performance period, which would result in the PSAs converting into the maximum number of RSUs in early 2012. This is an assumption required by SEC rules.

(3)

Excludes the restricted stock units and PSAs referred to in note 2 above.

(4)

Includes (i) 4,495,243 shares of common stock available for future issuance under the Amended and Restated Hexcel Corporation 2003 Incentive Stock Plan, which shares of common stock could be issued in connection with awards other than options, warrants or rights, (ii) 152,910 shares reserved for issuance under the Management Stock Purchase Plan, (iii) 13,985 shares of common stock subject to options as of December 31, 2009 under, and purchased in January 2010 pursuant to, the terms of the Hexcel Corporation 2009 Employee Stock Purchase Plan; and (iv) 236,015 shares of common stock that could after December 31, 2009 become subject to options under, and therefore purchased under, the terms of the Hexcel Corporation 2009 Employee Stock Purchase Plan. Although the Management Stock Purchase Plan has not been formally terminated, use of the plan was discontinued with respect to annual cash bonuses for years after 2007.

(5)

The only equity compensation arrangements in which equity securities were authorized that have not been approved by stockholders are two option agreements with Mr. Berges entered into in connection with his employment agreement, as described under the heading "Employment Agreement with Mr. Berges" on page 45.

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(1)

Reflects the aggregate grant date fair value of RSUs and PSAs granted to the NEO during such year, computed in accordance with FASB ASC Topic 718. These amounts do not correspond to the actual value that will be realized by the NEO. The amount included for each PSA reflect the estimate of aggregate compensation cost to be recognized over the life of the PSA determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. This assumes that the PSA will pay out at target. The amount reflected in the table above for each PSA, as well as the value for each PSA at the grant date assuming that the highest level of performance will be achieved, is as follows:

(2)

For additional information regarding the assumptions made in calculating these amounts, see Note 11, "Stock-Based Compensation," to the consolidated financial statements, and the discussion under the heading "Critical Accounting Policies—Share-Based Compensation" in Management's Discussion and Analysis of Financial Condition and Results of Operations, each included in our Annual Report on Form 10-K for the year ended December 31, 2009, and Note 12, "Stock-Based Compensation," to the consolidated financial statements, and the discussion under the heading "Critical Accounting Policies—Share-Based Compensation" in Management's Discussion and Analysis of Financial Condition and Results of Operations, each included in our Annual Report on Form 10-K for the year ended December 31, 2008.

(3)

Reflects the aggregate grant date fair value of all NQOs granted to the NEO during such year, computed in accordance with FASB ASC Topic 718. These amounts do not necessarily correspond to the actual value that will be realized by the NEO.

(4)

Reflects amounts earned under the MICP with respect to 2009, 2008 and 2007. Such amounts were paid in 2010, 2009 and 2008, respectively.

(5)

Represents the change in pension value for the year indicated for each NEO. The amounts in this column were calculated assuming retirement at age 65 for all NEOs except Mr. Krakower, which is the normal retirement age under the relevant pension plans and arrangements. Since Mr. Krakower is over age 65, current age was used as the assumed retirement age. The interest rate and mortality assumptions used are consistent with those used in the preparation of Hexcel's financial statements. See Note 8, "Retirement and Other Postretirement Benefit Plans" to the consolidated financial statements, and the discussion under the heading "Retirement and Other Postretirement Benefit Plans" in Management's Discussion and Analysis of Financial Condition and Results of Operations, each included in our Annual Report on Form 10-K for the year ended December 31, 2009, for a description of these interest rate and mortality assumptions.

The increase in pension value during 2008 for Messrs. Berges and Pensky was much less than the increase during 2007, and in the case of Mr. Krakower the value decreased. This is primarily because the interest rate used to compute the pension value as of December 31, 2008 was much higher than the December 31, 2007 interest rate. The plan documents specify that the lump sum interest rate to be used is 120% of the PBGC interest rate for the month in which benefits commence.

The increase in pension value during 2009 for Messrs. Berges, Pensky, Krakower and Hennemuth was much larger than the increase during 2008. This result is due to a substantial decrease in the PBGC interest rate used to calculate a lump sum payment, as well as a decrease in the FAS 87 interest rate. In addition, since SERP benefits are based on a final average pay formula that is based on the highest paid 36 of the last 60 months, a higher than average 2009 cash bonus replaced a different year's lower bonus contributing to the increase in SERP benefits for Messrs. Berges and Krakower.

(6)

For each year, represents the difference between the actuarial present value of the executive's accumulated benefit under his SERP as of December 31 of the current year and December 31 of the prior year. See footnote (5) for an explanation of the changes in value from year to year.

(7)

The amounts in the "All Other Compensation Column" for 2009 include the following:

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(a)

The perquisites allowance consists of a car allowance of $12,000 and an additional amount of $10,600 (in the case of Messrs. Pensky and Krakower) and $5,600 (in the case of Mr. Hennemuth). The additional amount may be used for reimbursement of club membership dues, expenses incurred for financial counseling and tax planning and preparation, premiums for supplemental life and health insurance beyond the standard life and health insurance available to our executives and, to the extent of any remaining balance, to reimburse the NEO for taxes due on the reimbursements ("tax gross-up"). The additional amount was used by the NEOs for the following benefits: Mr. Pensky—supplemental life insurance; Mr. Krakower—tax planning, tax preparation and financial planning; and Mr. Hennemuth—supplemental life insurance. While the compensation committee always has the discretion to authorize additional perquisites for an NEO, our perquisites allowance has remained unchanged since 2000, except that all perquisites were eliminated for Mr. Berges in 2006 and were not offered to Mr. Stanage or Mr. Grosman when they were hired.

(b)

With respect to Mr. Grosman, consists of a payment made in connection with his termination of employment paid pursuant to an executive severance agreement between us and Mr. Grosman.

(8)

Mr. Stanage began employment with us on November 9, 2009. His annual salary rate in 2009 was $535,000.

(9)

Mr. Pensky was promoted to Senior Vice President and Chief Financial Officer effective April 27, 2007. Effective on such date, Mr. Pensky's salary annual was $325,000.

(10)

It was a condition to Mr. Pensky's promotion to Senior Vice President and Chief Financial Officer that he relocate from the San Francisco area to the Stamford, Connecticut area. Upon his promotion, Mr. Pensky received a promotional bonus of $100,000, which was payable upon the closing of the purchase of his home in the Stamford, Connecticut area.

(11)

Mr. Pensky elected to defer $68,256 of this amount to purchase RSUs under the Management Stock Purchase Plan (MSPP). For more information about the MSPP, see page 54. Mr. Pensky purchased 4,259 RSUs at a price of $16.0256 per RSU on January 22, 2008. The difference between the price paid by Mr. Pensky for the RSUs and the fair market value of the RSUs on the date of grant was $12,029, and is reflected in the "All Other Compensation Column." For this purpose, the fair market value of an RSU on the grant date is deemed to be equal to the closing price of a share of Hexcel common stock on the grant date, which was $18.85.

(12)

For 2009 and 2008, represents the difference between the actuarial present value of Mr. Pensky's accumulated benefit under his EDCA as of December 31, 2009 and 2008, and December 31, 2008 and 2007. For 2007, represents the sum of (a) the difference between the actuarial present value of Mr. Pensky's accumulated benefit under his EDCA as of December 31, 2007 and December 31, 2006 ($96,431), and (b) the difference between the actuarial present value of Mr. Pensky's accumulated benefit under our former pension plan as of December 31, 2007 and December 31, 2006 ($4,239). Our pension plan was terminated, and all amounts under the pension plan were paid out, in 2007. See footnote (5) for an explanation of the changes in value from year to year.

(13)

For 2009, represents the difference between the actuarial present value of Mr. Krakower's accumulated benefit under his SERP as of December 31, 2008 and December 31, 2009. The actuarial present value of Mr. Krakower's accumulated benefit under his SERP decreased by $239,541 from December 31, 2007 to December 31, 2008, and is reported as zero as required by SEC rules. For 2007, represents the sum of (a) the difference between the actuarial present value of Mr. Krakower's accumulated benefit under his SERP as of December 31, 2007 and December 31, 2006 ($577,686), and (b) the difference between the actuarial present value Mr. Krakower's accumulated benefit under our former pension plan as of December 31, 2007 and December 31, 2006 ($22,548). See footnote (5) for an explanation of the changes in value from year to year.

(14)

Represents the difference between the actuarial present value of Mr. Hennemuth's accumulated benefit under his EDCA as of December 31 of the current year and December 31 of the prior year. See footnote (5) for an explanation of the changes in value from year to year.

(15)

Mr. Grosman began employment with us on February 23, 2009, and his employment with us terminated on August 7, 2009. His annual salary rate in 2009 was $535,000.

(16)

Upon Mr. Grosman's termination, all of his NQOs and RSUs immediately terminated. With respect to the PSAs granted to Mr. Grosman, he is entitled to receive a portion of the award, based on the level of performance obtained for the first year of the 2009-2011 three-year performance period.

(17)

Mr. Grosman's payment under the MICP was not pro-rated for less than 12 month's service, in accordance with the terms of Mr. Grosman's executive severance agreement.

(18)

Represents the amount that was paid to Mr. Grosman under his SERP in connection with his termination of employment. Of the total amount, $262,637 was paid in September 2009, and $306,194 was paid in 2010. The portion paid in 2010 was delayed because it could not be calculated until Mr. Grosman's cash bonus for 2009 under the MICP was determined.