Audit/Finance Committee Report required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. These disclosures have been reviewed by the Audit/Finance Committee and discussed with PricewaterhouseCoopers LLP. Based on the reviews and discussions described in this report, the Audit/Finance Committee has recommended to the Board that Carpenter’s audited consolidated financial statements be included in Carpenter’s 2016 Annual Report on Form 10-K for filing with the SEC. Submitted by the Audit/Finance Committee of the Board of Directors, CHAIR: I. Martin Inglis Members: Carl G. Anderson, Jr Robert R. McMaster Peter N. Stephans 36 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Proposal 3: Advisory Vote to Approve the Compensation oPf rOouxryNSaummemdaEryxecutive Officers Each year since 2012 we ask our stockholders to vote to approve, on an advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement, including the Compensation Discussion & Analysis (“CD&A”), the Compensation Tables and any related material as required pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-On-Pay” proposal, gives our stockholders the opportunity to express their views on our NEO compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. The say-on-pay vote is advisory, and therefore not binding on the company, the Compensation Committee or the Board of Directors. The Board of Directors and the Compensation Committee value the opinions of the stockholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. We believe that the policies and procedures articulated in the “CD&A” and “Executive Compensation” sections of this Proxy Statement are effective in achieving Carpenter’s goals and that the executive compensation reported in this Proxy Statement was appropriate and aligned with fiscal year 2016 results. Before voting, we encourage our stockholders to read the “Compensation Discussion and Analysis” and “Executive Compensation" sections of this Proxy Statement for additional details about our executive compensation programs and NEO compensation in fiscal year 2016. The Compensation Committee continually reviews the compensation programs for our NEOs to ensure that they achieve the desired goal of offering total compensation consisting of base salary competitive with an identified peer group of companies and incentive opportunities that are performance-oriented and linked to the interests of stockholders. We are asking stockholders to indicate their support for our NEO compensation as described in this Proxy Statement. The Board of Directors recommends that you vote FOR Proposal 3 to approve the 37 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT [2] FOR compensation of the NEOs as disclosed in this Proxy Statement on an advisory basis. Our Pay for Performance Compensation Our executive compensation programs are designed to provide compensation levels benchmarked to attract, motivate and retain exceptional managerial talent for the present and future, to reward them for achieving financial and strategic company goals, and to align their interests with the interests of stockholders. We believe that the compensation of our NEOs is reasonable, competitive and strongly focused on pay for performance principles. We emphasize compensation opportunities that appropriately reward executives for delivering financial results that meet or exceed pre-established goals, and executive compensation varies depending upon the achievement of those goals. Through stock ownership requirements and equity incentives, we believe that we have aligned the interests of our NEOs with those of our stockholders and the long-term interests of the company.

Proposal 34: Appvroisvaolroyf tVhoe tAemteondAedppanrdovRestahtedCSotomckp-Beansseadtion oPInfrcoeOnxutyirveSNCuaommmpeedansrEaytxioencPulatinvfeorOOfficceersrsand Key Employees We are asking stockholders to approve the amended and restated Stock-Based Incentive Compensation Plan for Officers and Key Employees (the ”Omnibus Plan”). An affirmative vote approving the amended and restated Omnibus Plan constitutes a vote approving the performance criteria listed therein. Carpenter’s Board of Directors adopted the amended and restated Omnibus Plan on August 9, 2016, subject to stockholder approval. The amended and restated Omnibus Plan also increases the number of shares of Carpenter Common Stock reserved for issuance by 3,500,000 shares. As of August 12, 2016, approximately 74,385 shares remain available for issuance under the Omnibus Plan. Compensation Governance Highlights of the 2016 Omnibus Plan f Awards are subject to potential reduction, cancellation or forfeiture in certain circumstances f No tax gross-ups f No discounted options may be granted f No repricing of stock options without stockholder approval Key Elements of the Omnibus Plan Administration Compensation Committee, which is made up entirely of independent directors. Effective Date Effective upon approval by Carpenter’s stockholders. Eligible Participants Awards may be granted to any officer, management director or other key employee of the company or a subsidiary, who is selected by Carpenter to participate in the Omnibus Plan. Total Shares Available for Awards Under Plan 3,500,000 shares, plus approximately 74,385 shares still remaining available for issuance. Unavailable for Issuance The following will not again become available for issuance under the Plan: f Any shares tendered or withheld to pay the exercise price of stock options; f Any shares withheld in respect of taxes; and f Any shares repurchased by the company from optionee with proceeds from exercise of stock options. Award Types Stock Options, Restricted Stock and Restricted Stock Units; only nonqualified Options may be granted under the Omnibus Plan. 38 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Purpose of the Omnibus Plan – Why our Board recommends you vote to approve this proposal The purpose of the Omnibus Plan is to attract and retain valued employees by offering them a greater stake in Carpenter’s success and a closer identity with it, and to encourage ownership of the company’s stock. Our Omnibus Plan is designed to motivate our key employees to achieve superior performance as measured by financial and operating metrics as well as stock price appreciation. We believe that equity granted under the Omnibus Plan is a critical component of our compensation program and pay for performance culture. Equity compensation contributes to long-term sustainable growth and aligns management’s interests with the interests of our stockholders. The Board believes your vote to approve this proposal will help us to achieve superior performance in the future.

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Key Elements of the Omnibus Plan Performance Metrics Performance Goals may be measured on an absolute or relative basis. Relative performance may be measured against an external index, such as a group of peer companies, industry groups or a financial market index. Awards intended to meet the requirements of Section 162(m) of the Code applicable to qualified performance-based compensation (“Qualified Performance-Based Awards”) are limited to one or more of the Performance Goals (listed on p. 41). Nontransferability of Awards In general, during a Participant’s lifetime, Awards are exercisable only by the Participant and are not transferable other than by will or laws of descent and distribution. However, the Committee may provide for limited lifetime transfers of Awards to certain family members, trusts for the benefit of family members, or partnerships in which such family members are the only partners. In addition, the Committee may provide in any Award Agreement terms and conditions under which the Participant must sell or offer to sell any Awards, whether or not vested, and any common stock acquired pursuant to an Award to the company. Amendments and Termination Stockholder approval is required for any amendment which: f increases the number of shares available for Awards under the Omnibus Plan (other than to reflect a change in the company’s capital structure); f decreases the price at which Awards may be granted; or f as otherwise required by applicable law, regulation, or rules of any stock exchange or automated quotation system on which the common stock may then be listed or quoted. Unless earlier terminated by the Committee/Board, the Omnibus Plan will terminate and expire on the date which is ten years after the most recent stockholder approval of the Plan or upon the date on which all outstanding Awards have expired, terminated, been paid or otherwise provided for, and no Awards under the Omnibus Plan shall thereafter be granted. Section 162(m) Limitations Section 162(m) of the Code limits the deductibility of compensation paid to certain executive officers, unless the compensation is a Qualified Performance-Based Award. If Awards are intended to qualify as Qualified Performance-Based Awards, the Omnibus Plan limits the maximum number of shares of Common Stock that may be granted to the recipient during any calendar year to 500,000 shares. Summary of the Omnibus Plan The following general description of certain features of the Omnibus Plan is qualified in its entirety by reference to the Omnibus Plan which is attached as Exhibit A. Capitalized terms not otherwise defined in this summary have the meanings given to them in the Omnibus Plan. General. The Omnibus Plan authorizes the grant of Options, Restricted Stock, and Restricted Stock Units (collectively, “Awards”). Only nonqualified Options may be granted under the Omnibus Plan. Number of Shares Reserved. Carpenter’s Board of Directors has reserved 3,500,000 shares of common stock, plus approximately 74,385 shares still remaining available, for issuance pursuant to Awards granted under the amended and restated Omnibus Plan. The maximum number of shares that may be granted to any Employee as Awards under the Omnibus Plan during any calendar year shall not exceed 500,000 shares. To the extent any shares subject to an Award are forfeited or to the extent an Award otherwise terminates or is settled for any reason without an actual distribution of shares to the Participant, any shares counted against the number of shares available for issuance pursuant to the Omnibus Plan with respect to such Award shall, to the extent of any such forfeiture, settlement, or termination, again be available for Awards under the Omnibus Plan. However, the following will not again become available for issuance under the Omnibus Plan: any shares withheld in respect of taxes; any shares tendered or withheld to pay exercise price of stock options; and any shares repurchased by the company from optionee with proceeds from exercise of stock options. 39 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees In the event that any stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event, affects the common stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Omnibus Plan, then the Committee (as defined below) will, in such manner as it may deem equitable, adjust any or all of the following: f the number and kind of shares of common stock which may thereafter be issued in connection with Awards; f the number and kind of shares of common stock issuable in respect of outstanding Awards; f the aggregate number and kind of shares of common stock available under the Omnibus Plan; and f the exercise or Award-date price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award. However, in each case, no adjustment will be made that would adversely affect the status of any Award that is intended to be a Qualified Performance-Based Award. Administration. The Compensation Committee (the “Committee”) administers the Omnibus Plan. With respect to “Qualified Performance-Based Awards” (discussed below), the Committee or a designated subcommittee is to be comprised exclusively of two or more members of the Board who are Non-Employee Directors and “outside directors” within the meaning of Section 162(m)(4)(C) of the Code and treasury regulation 1.162-27(e)(3). Subject to the other provisions of the Omnibus Plan, the Committee has the authority to: f Select the Employees who will receive Awards pursuant to the Omnibus Plan; f Determine the type(s) of Awards to be granted to each Participant; f Determine the number of shares of common stock to which an Award will relate, the terms and conditions of any Award granted under the Omnibus Plan (including, but not limited to, restrictions as to vesting, transferability or forfeiture, exercisability or settlement of an Award and waivers or accelerations thereof, and waivers of or modifications to performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine) and all other matters to be determined in connection with an Award; f Determine whether, to what extent, and under what circumstances an Award may be canceled, forfeited, or surrendered; f Determine whether, and to certify that, Performance Goals to which the settlement of an Award is subject are satisfied; f Correct any defect or supply any omission or reconcile any inconsistency in the Omnibus Plan, and to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Omnibus Plan; and f Make all other determinations as it may deem necessary or advisable for the administration of the Omnibus Plan. The Committee may delegate to Carpenter’s CEO its authority under the first four items above, to grant Awards covering a pre-determined aggregate number of shares of common stock. Such delegation is limited to the authority to grant and amend Awards to Participants who are not subject to the requirements of Rule 16b-3 of the Exchange Act. Any Awards granted or amended by the CEO are to be subject to the terms of the Omnibus Plan. The CEO shall report to the Committee, in a form and manner to be determined by the Committee, at least annually on the disposition of shares subject to Awards granted or amended by the CEO. Any reference to the Committee hereafter includes the CEO to the extent the Committee has delegated the authority to grant or amend Awards. Eligibility. Awards may be granted to any officer or other key employee of the company or a subsidiary including a director who is such an employee, who is selected by the company to participate in the Omnibus Plan. The maximum number of shares that may be awarded to any Participant as Qualified Performance-Based Awards (described below) in any calendar year may not exceed 500,000. 40 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Each Award granted under the Omnibus Plan will be evidenced by a written agreement between the Participant and the Company, which will describe the Award and state the terms and conditions applicable to such Award. The principal terms and conditions of each particular type of Award are described below. Performance Goals. The Award Agreements may provide for vesting or earning the Award based on achievement of Performance Goals during a specified period. Performance Goals may be measured on an absolute or relative basis. Relative performance may be measured against an external index, such as a group of peer companies, industry groups or a financial market index. Awards intended to meet the requirements of Section 162(m) of the Code applicable to qualified performance-based compensation (“Qualified Performance-Based Awards”) are limited to one or more of the following Performance Goals: f the price of common stock f market share f sales f revenue f earnings or diluted earnings per share of common stock, with or without net pension credit/expense f return on stockholder equity f return on common book equity f costs f cash flow f return on total assets (“ROA”) f return on invested capital f return on net assets (“RONA”) f income, including but not limited to operating income and net income, with or without net pension credit/ expense f operating margin f capital costs f changes in working capital or inventory levels f earnings before interest and income taxes (“EBIT”), or earnings before interest, income taxes, depreciation and amortization (“EBITDA”) f economic profit f total stockholder return f economic value added f expenses or operating expenses f cost reduction goals f market penetration f geographic expansion f diversity representation f total case incidence rate f customer satisfaction as measured by expenses or costs of, or lost income, revenue, or sales attributable to, customer claims for refunds or remakes or f any combination of the above The performance goals may be applied to the company, any affiliate or any business unit, either individually, alternatively or in combination. Adjustments. The Committee may modify the performance goals previously established with respect to a particular grant of an Award to address accounting expenses of equity compensation; amortization of acquired technology and intangibles; asset write-downs; litigation-related events; changes in laws affecting reported results; reorganization and restructuring programs; discontinued operations; and extraordinary or nonrecurring or infrequent events. In the case of Qualified Performance-Based Awards, these adjustments must be made in a manner consistent with Section 162(m) and its regulations. 41 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Types of Awards. The following table provides details about each type of Award under the Omnibus Plan. Award Type Information Detail Options An Option is the right to purchase shares of common stock for a specified period of time at a fixed price (the “exercise price”). Each Award Agreement will specify the exercise price, the type of Option, the term of the Option, and the date or dates when the Option will become exercisable. Each grant of Options is to specify the length of service that must be achieved before it becomes exercisable. Options may only be granted to employees, shall only be transferable by will or under the laws of descent and distribution, and, during the Participant’s lifetime, may only be exercised by the Participant. Only Non-Qualified Options may be granted under the Omnibus Plan. Exercise Price. The Committee will determine the exercise price of an Option at the time the Option is granted. The exercise price of a Non-Qualified Option will not be less than 100% of the Fair Market Value of common stock on the date the Option is granted. For purposes of the Plan, Fair Market Value is defined as the closing price of a share of common stock on the New York Stock Exchange, or, in the absence of a closing price on such date, the closing price on the last trading day preceding such date. However, the Committee may use the closing price as of the indicated date, the average price or value as of the indicated date or for a period certain ending on the indicated date, the price determined at the time the transaction is processed, the tender offer price for shares of Common Stock, or any other method which the Committee determines is reasonably indicative of the fair market value of the common stock; provided, however, that for purposes of granting Options or Restricted Stock Units, Fair Market Value of Stock shall be determined in accordance with the requirements of Code Section 409A. Other than in connection with a change in capitalization, the exercise price of an Option may not be reduced without stockholder approval. Consideration. The means of payment for shares issued upon exercise of an Option will be specified in each Award Agreement and generally may be made by the Participant in cash, by the surrender at Fair Market Value of common stock, by any combination of cash and shares of common stock, the means or methods of payment, including “cashless exercise” arrangements such as through a broker or by net exercise, to the extent permitted by applicable law, and the methods by which, or the time or times at which, common stock will be delivered or deemed to be delivered to the Participant upon the exercise of such Option. The Committee may not permit payment through any method that would constitute a prohibited extension of credit to those officers of the company who are subject to the provisions of the Sarbanes-Oxley Act of 2002. Term of the Option. The term of an Option granted under the Omnibus Plan will be no longer than ten years from the date of grant. Reload Grants. Options shall not be granted in consideration for and shall not be conditioned upon the delivery of shares of common stock to the company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant. Restricted Stock An Award of Restricted Stock is a grant to the recipient of a specified number of shares of common stock that are subject to forfeiture upon specified events during the Restriction Period. Each grant of Restricted Stock is to specify the duration of the Restriction Period and any other conditions under which the Restricted Stock would be forfeitable to the company, including any applicable Performance Goals, and will include restrictions on transfer to third parties during the Restriction Period. The Restriction Period for such Awards, unless otherwise determined by the Committee, must be at least: f three years for Awards that vest solely on the passage of time; and f one year for Awards that are earned in whole or in part upon the attainment of Performance Goals. During the Restriction Period, the Committee may, but is not required to, authorize the payment of an amount equivalent to a dividend declared and paid on Carpenter’s common stock to any Participant awarded Restricted Stock. Payment may be made in cash currently or deemed reinvested in Restricted Stock as determined by the Committee in its sole discretion. During the Restriction Period, the Participant will have the right to vote the shares of Restricted Stock. 42 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Award Type Information Detail Restricted Stock Units A Restricted Stock Unit is a book-entry unit with a value equal to one share of Common Stock. Awards of Restricted Stock Units may be made under the Omnibus Plan. A grant of Restricted Stock Units will vest and become payable to the Participant upon other future events, including the achievement during a specified performance cycle of Performance Goals established by the Committee or the passage of time. Each grant of Restricted Stock Units will specify the conditions, including the passage of time and Performance Goals, if applicable, that must be satisfied in order for payment to be made. Payment of Restricted Stock Units may be made in cash, shares of common stock, or a combination of both, equal to the Fair Market Value of the shares of common stock to which the Award relates. The Committee may, but is not required to, authorize the payment of an amount equivalent to a dividend declared and paid on Carpenter’s common stock to any Participant awarded Restricted Stock Units, provided that any such payment, if authorized, shall be paid within thirty (30) days following the date the dividend was paid to holders of the company’s common stock. It will be in the form of: f cash, or f additional Restricted Stock Units that are subject to the provisions of the Award Agreement governing the Restricted Stock Units upon which the dividend is paid; provided, however, that a dividend equivalent will be forfeited if the Participant terminates employment with the company for any reason prior to the payment date of the dividend equivalent. A Participant will not have voting rights with respect to Restricted Stock Units prior to payment of common stock in satisfaction of such Restricted Stock Units. General Provisions Vesting. Any Award may provide for full vesting, early exercise rights or termination of a restriction in the event of a Change in Control or similar event. Nontransferability of Awards. In general, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant and shall not be transferable other than by will or laws of descent and distribution. However, the Committee may provide for limited lifetime transfers of Awards to certain family members, trusts for the benefit of family members, or partnerships in which such family members are the only partners. In addition, the Committee may provide in any Award Agreement terms and conditions under which the Participant must sell or offer to sell any Awards, whether or not vested, and any common stock acquired pursuant to an Award to the company. Termination of Employment. Each Award Agreement will provide rules for the exercise or vesting of such Award following termination of employment for any reason, which may include, but not be limited to, death, Disability, termination for Cause or Retirement. The Committee may take actions and provide in Award Agreements for such post-termination rights that it believes to be equitable under the circumstances or in the best interests of the company with respect to Awards that are not fully earned, vested or exercisable. However, in the absence of specific Committee resolution to the contrary, the following terms will apply to Awards following a Participant’s termination: In the event of the Participant’s death on or after the one-year anniversary of the grant of an Option, the Participant’s beneficiary may exercise the Option at any time before the expiration of the term of the Option. In the event of the Participant’s termination due to Disability or Retirement on or after the one-year anniversary of the grant of an Option, the Option will be exercisable for the remainder of the term. A Participant will have three months following termination for any reason other than death, Disability or Retirement to exercise any Option, to the extent exercisable at the time of such termination. In the event of the Participant’s death, Disability or Retirement prior to the payment of an Award of Restricted Stock or Restricted Stock Units, the Award will vest immediately, except in the case of an Award based upon the company’s achievement of Performance Goals. In that case, the Award will vest based upon the company’s achievement of Performance Goals at the time the Award would have otherwise vested had the Participant’s employment continued. If the Participant’s death, Disability or Retirement occurred prior to the completion of the Performance Period, the Award 43 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees may be pro-rated. The Committee may determine that accelerated vesting of Awards is not appropriate for certain Retirements. Notwithstanding the foregoing, the Committee retains the right to revoke or revise the terms of any unearned, unvested, or unexercised Award in the event of a Participant’s termination for Cause. Change in Control. Unless otherwise determined in the applicable Award Agreement, on the occurrence of a Change in Control: f each Option then outstanding shall become immediately exercisable to the full extent of any shares of common stock subject thereto; f any remaining restrictions on shares of Restricted Stock shall immediately lapse; and f the Performance Goals and/or time period or periods applicable to any Restricted Stock Units shall be deemed satisfied and payment shall be made. For purposes of the Omnibus Plan, “Change in Control” is defined in Section 2.5 of the Omnibus Plan document presented as Exhibit A. Effective Date, Amendments, and Termination of the Omnibus Plan. The Omnibus Plan will be effective upon its approval by Carpenter stockholders. The Board of Directors or Committee has the authority to amend or terminate the Omnibus Plan at any time. However, stockholder approval is required for any amendment which: f increases the number of shares available for Awards under the Omnibus Plan (other than to reflect a change in the company’s capital structure); f decreases the price at which Awards may be granted; or f as otherwise required by applicable law, regulation, or rules of any stock exchange or automated quotation system on which the common stock may then be listed or quoted. Unless earlier terminated by the Board or Committee, the Omnibus Plan will terminate and expire on the date which is ten years after the most recent stockholder approval of the Plan, or upon the date on which all outstanding Awards have expired, terminated, been paid or otherwise provided for, and no Awards under the Omnibus Plan shall thereafter be granted. Certain Federal Income Tax Considerations The following discussion is a summary of certain federal income tax considerations that may be relevant to Participants in the Omnibus Plan. The discussion is for general informational purposes only and is not intended to address specific federal income tax considerations that may apply to a Participant based on his or her particular circumstances, nor does it address state or local income tax, or other tax considerations that may be relevant to a Participant. Participants are urged to consult their own tax advisors with respect to the particular federal income tax consequences to them of participating in the Omnibus Plan, as well as with respect to any applicable state or local income tax or other tax considerations. Non-Qualified Options A Participant realizes no taxable income and the company is not entitled to a deduction when a Non-Qualified Option is granted. Upon exercise of a Non-Qualified Option, a Participant will realize ordinary income equal to the excess of the Fair Market Value of the shares received over the exercise price of the Non-Qualified Option, and, subject to Section 162(m) of the Code, the company will be entitled to a corresponding deduction. A Participant’s tax basis in the shares of common stock received upon exercise of a Non-Qualified Option will be equal to the Fair Market Value of such shares on the exercise date, and the Participant’s holding period for such shares will begin at that time. Upon sale of the shares of common stock received upon exercise of a Non-Qualified Option, the Participant will realize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year. The amount of such gain or loss will be equal to the difference between the amount realized in connection with the sale of the shares, and the Participant’s tax basis in such shares. 44 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Under the Omnibus Plan, Non-Qualified Options may, with the consent of the Committee, be exercised in whole or in part with shares of common stock held by the Participant. Payment in common stock will be treated as a tax-free exchange of the shares surrendered for an equivalent number of shares of common stock received, and the equivalent number of shares received will have a tax basis equal to the tax basis of the surrendered shares. The Fair Market Value of shares of common stock received in excess of the number of shares surrendered will be treated as ordinary income and such shares have a tax basis equal to their Fair Market Value on the date of the exercise of the Non-Qualified Option. Restricted Stock Restricted Stock received pursuant to Awards will be considered subject to a substantial risk of forfeiture for federal income tax purposes. If a Participant who receives such Restricted Stock does not make the election described below, the Participant realizes no taxable income upon the receipt of Restricted Stock and the company is not entitled to a deduction at such time. When the forfeiture restrictions with respect to the Restricted Stock lapse, the Participant will realize ordinary income equal to the Fair Market Value of the shares at that time, and, subject to Section 162(m) of the Code, the company will be entitled to a corresponding deduction. A Participant’s tax basis in Restricted Stock will be equal to the Fair Market Value when the forfeiture restrictions lapse, and the Participant’s holding period for the shares will begin when the forfeiture restrictions lapse. Upon sale of the shares, the Participant will realize short-term or long-term gain or loss, depending upon whether the shares have been held for more than one year at the time of sale. Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the tax basis of the shares in the Participant’s hands. Generally, during the restriction period, dividend equivalents and distributions paid with respect to Restricted Stock will be treated as compensation income (not dividend income) received by the Participant. Dividend payments received with respect to shares of Restricted Stock for which a Section 83(b) election has been made will be treated as dividend income, assuming the company has adequate current or accumulated earnings and profits. Restricted Stock Units A Participant realizes no taxable income and the company is not entitled to a deduction when Restricted Stock Units payable in the future and subject to conditions such as the passage of time or achievement of Performance Goals are granted. When Restricted Stock Units vest and become payable as a result of the satisfaction of the terms and conditions on such Award, including, if applicable, achievement of Performance Goals, the Participant will realize ordinary income equal to the amount of cash received or the Fair Market Value of the shares received minus any amount paid for the shares, and, subject to Section 162(m) of the Code, the company will be entitled to a corresponding deduction. 45 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Section 83(b) Elections: Participants receiving Restricted Stock may make an election under Section 83(b) of the Code with respect to the shares. By making a Section 83(b) election, the Participant elects to realize compensation income with respect to the shares when the shares are received rather than at the time the forfeiture restrictions lapse. The amount of compensation income will be equal to the Fair Market Value of the shares when the Participant receives them (valued without taking the restrictions into account), and the company will be entitled to a corresponding deduction at that time. By making a Section 83(b) election, the Participant will realize no additional compensation income with respect to the shares when the forfeiture restrictions lapse, and will instead recognize gain or loss with respect to the shares when they are sold. The Participant’s tax basis in the shares will be equal to their Fair Market Value when received by the Participant, and the Participant’s holding period for such shares begins at that time. If, however, the shares are subsequently forfeited to the company, the Participant will not be entitled to claim a loss with respect to the shares to the extent of the income realized by the Participant upon the making of the Section 83(b) election. To make a Section 83(b) election, a Participant must file an appropriate form of election with the Internal Revenue Service and with his or her employer, each within 30 days after shares of Restricted Stock are granted, and the Participant must also attach a copy of his or her election to his or her federal income tax return for the year in which the shares are granted.

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees A Participant’s tax basis in shares of common stock received upon payment will be equal to the Fair Market Value of such shares when the Participant receives them. Upon sale of the shares, the Participant will realize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year at the time of sale. Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the tax basis of the shares in the Participant’s hands. The Committee may, but need not, permit a Participant to defer receipt of payment in satisfaction of Restricted Stock Units, provided that any such deferral shall be administered in compliance with Section 409A of the Code and the guidance thereunder. The Committee is authorized to take such action as it deems necessary and reasonable to avoid the application of the additional tax described in Section 409A(a)(1)(B) of the Code to any Award deferred hereunder. Section 162(m) Limitations Section 162(m) of the Code limits the deductibility of compensation paid to certain executive officers, unless the compensation is a Qualified Performance-Based Award. If Awards to such persons are intended to qualify as Qualified Performance-Based Awards, the Omnibus Plan limits the maximum number of shares of common stock that may be granted to the recipient during any calendar year to 500,000 shares. Withholding The company is entitled to deduct from the payment of any Award (whether made in stock or in cash) all applicable income and employment taxes required by federal, state, local or foreign law to be withheld, or may require the Participant to pay such withholding taxes to the company as a condition of receiving payment of the Award. The Committee may allow a Participant to satisfy his or her withholding obligations by directing the company to retain the number of shares necessary based on the maximum individual federal and state statutory tax rates in the applicable jurisdiction to satisfy the withholding obligation, or by delivering shares held by the Participant to the company in an amount necessary to satisfy the withholding obligation. Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of June 30, 2016, regarding the number of shares of common stock that may be issued under the company’s equity compensation plans: Equity Compensation Plan Information Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Plan category Equity compensation plans approved by security holders 1,701,502 $43.35 1,784,483(1) Equity compensation plans not approved by security holders — — — Total 1,701,502 $43.35 1,784,483(1) (1) Includes 1,180,272 shares available for issuance under the Stock-Based Incentive Compensation Plan for Officers and Key Employees (which provides for the issuance of stock options, restricted stock, and restricted stock units) and 604,211 shares available under the Stock-Based Compensation Plan for Non-Employee Directors (which provides for issuance of stock options, stock and units). Because our Compensation Committee has discretion to grant future equity awards of a type and amount determined in its discretion, it is not possible at present to determine the persons to whom awards will be granted under the Omnibus 46 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 4: Approval of the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees Plan for the fiscal year ending June 30, 2017, or the amounts and types of any such individual grants. Alternatively, because the Omnibus Plan, if approved, would be substantially similar to the current version of our equity plan, the new plan benefits table instead sets forth the grants made in the fiscal year ended June 30, 2016, as follows: New Plan Benefits Stock-Based Incentive Compensation Plan for Officers and Key Employees Number of Performance-Based Restricted Stock Units(1) Number of Time-Based Restricted Stock Units Name and Position Number of Stock Options Thene, Tony R. President and Chief Executive Officer 14,938 59,752 58,338 Audia, Damon J. Senior Vice President and Chief Financial Officer 2,796 11,184 11,263 Haniford, Joseph E. Chief Operating Officer 5,889 13,580 13,259 Lain, Timothy Vice President, Controller and Chief Accounting Officer 1,698 6,792 6,630 3,395 13,580 13,259 Strobel, David L. Former Senior Vice President and Chief Technology Officer 0 0 0 Ziolkowski, Andrew T. Former Senior Vice President – Special Projects Executive Group (NEOs) 28,716 104,888 102,749 Non-Executive Director Group 0 0 0 Non-Executive Officer Employee Group 102,025 146,888 137,459 (1) Represents the maximum (200% of Target) number of units the NEO could receive based upon attainment of Performance Goals. Vote Required for Approval The affirmative vote of a majority of the votes cast is required to approve the proposed amendment to the Omnibus Plan. If not approved, the Omnibus Plan will continue in its pre-amended form. and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees. 47 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT [2] FOR The Board of Directors recommends that you vote FOR Proposal 4 to approve the Amended

Proposal 5: Approval of the Amended and Restated Executive Bonus Compensation Plan We are asking our stockholders to approve the amended and restated Executive Bonus Compensation Plan (the “Compensation Plan”), which was restated effective as of July 1, 2014, and has been amended once since such date. Carpenter’s Board of Directors adopted the amended and restated Compensation Plan on August 9, 2016, subject to stockholder approval. Stockholder approval of the Compensation Plan is necessary so that awards under the Compensation Plan will continue to constitute “qualified performance-based compensation” under Section 162(m) of the Code and will be tax deductible by Carpenter. An affirmative vote approving the amended and restated Compensation Plan constitutes a vote approving the performance goals listed therein. Purpose of the Compensation Plan The Compensation Plan is intended to further the Board’s policy of linking executive compensation to the company’s performance and stockholders’ interests as a whole. The Compensation Plan enables the Board to achieve the following: f Motivate and reward our executives and key employees to: • achieve or exceed Carpenter’s financial and operating performance objectives; and • propel Carpenter’s business forward through focus on operational excellence and execution of our business strategy; f Link executives and key employees’ compensation with specific performance goals to achieve business objectives; f Reinforce the importance of accountability and team cooperation by tying executive and key employee compensation to company performance; and f Motivate, attract and retain talented leaders who can drive the implementation of our growth and operational excellence strategies. Summary of the Compensation Plan The following general description of certain features of the Compensation Plan is qualified in its entirety by reference to the Compensation Plan which is attached as Exhibit B. Capitalized terms not otherwise defined in this summary have the meanings given to them in the Compensation Plan. Eligible Participants. Any Senior Executive employee of Carpenter and any other key employee designated by the Compensation Committee may participate in the Compensation Plan. Administration. The Compensation Committee of the Board of Directors administers the Compensation Plan. With respect to “qualified performance-based compensation” under Section 162(m) of the Code, the Committee is to be comprised exclusively of two or more members of the Board who are non-employee “outside directors” within the meaning of Section 162(m)(4)(C) of the Code and treasury regulation 1.162-27(e)(3) or a subcommittee that is so comprised. The Committee (or subcommittee, if applicable) will have the authority, subject to the Plan provisions, 48 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Section 162(m) of the Internal Revenue Code of 1986, as amended, generally limits to $1 million per year the federal income tax deduction for compensation paid by a public company to certain key individuals. This $1 million per year limit does not apply to compensation that qualifies as “qualified performance-based compensation” under regulations adopted under the Code (“Regulations”). One condition for payments under the Compensation Plan to be qualified as performance-based compensation is that a majority of Carpenter stockholders approve the material terms of the Compensation Plan. The Board of Directors is seeking stockholder approval of the Compensation Plan at this meeting so that compensation payable under the Compensation Plan will be deductible qualified performance-based compensation under Section 162(m) of the Code.

Proposal 5: Approval of the Amended and Restated Executive Bonus Compensation Plan f To select employees to participate in the Compensation Plan; f To establish and administer the Performance Goals and the Executive Bonus Compensation opportunities applicable to each Participant and certify whether the Performance Goals have been attained; f To construe and interpret the Compensation Plan and any agreement or instrument entered into, under or in connection with the Compensation Plan; f To establish, amend, and waive rules and regulations for the Compensation Plan’s administration; and f To make all other determinations that may be necessary or advisable for the administration of the Compensation Plan. Any determination by the Committee pursuant to the Compensation Plan will be final, binding and conclusive on all employees and Participants and anyone claiming under or through any of them. Types of Awards. Carpenter may pay Participants cash in an amount equal to a specified percentage of their base salary, not to exceed in any calendar year four times the maximum deduction limit imposed by Section 162(m) of the Code, when and if certain pre-set Performance Goals are attained. Performance Goals and Awards. No later than 90 days after the first day of the Performance Period and while the Performance Goal is substantially uncertain, but in no case later than the date upon which 25% of the Performance Period has elapsed, the Committee is to establish in writing, the following: f The method for computing the amount of bonus compensation or percentage of Base Pay that may be payable under the Compensation Plan to each Participant in the Compensation Plan for such Performance Period if the Performance Goals established by the Committee for such Performance Period are attained in whole or in part; and f The Performance Goals for such Performance Period. The Performance Goals established by the Committee may be measured on an absolute or relative basis. Relative performance may be measured against an external index, such as a group of peer companies, industry groups or a financial market index. Performance Goals may be based upon: f the price of common stock f market share f sales f revenue f earnings or diluted earnings per share, with or without net pension credit/expense f return on stockholder equity f return on common book equity f costs f cash flow f return on total assets (“ROA”) f return on invested capital f return on net assets (“RONA”) f income, including but not limited to operating income and net income, with or without net pension credit/ expense f operating margin f capital costs f changes in working capital or inventory levels f earnings before interest and income taxes (“EBIT”), or earnings before interest, income taxes, depreciation and amortization (“EBITDA”) f economic profit f total stockholder return f economic value added f expenses or operating expenses f cost reduction goals f market penetration f geographic expansion f diversity representation f total case incidence rate f customer satisfaction as measured by expenses or costs of, or lost income, revenue, or sales attributable to, customer claims for refunds or remakes or f any combination of the foregoing The Performance Goals may be applied to the company, any affiliate or any business unit, either individually, alternatively or in combination. 49 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Proposal 5: Approval of the Amended and Restated Executive Bonus Compensation Plan Adjustments. The Committee may modify the performance goals previously established with respect to a particular grant of an Award to address accounting expenses of equity compensation; amortization of acquired technology and intangibles; asset write-downs; litigation-related events; changes in laws affecting reported results; reorganization and restructuring programs; discontinued operations; and extraordinary or nonrecurring or infrequent events. In the case of Qualified Performance-Based Awards, these adjustments must be made in a manner consistent with Section 162(m) and the regulations thereunder. Payment. Benefits or amounts that will be received by or allocated to Participants in the Compensation Plan are not determinable until the completion of the Performance Period. Amendment. The Committee may amend, modify or terminate this Compensation Plan at any time. The Compensation Plan will remain in effect until terminated by the Board or Committee. Because our Compensation Committee has discretion to grant future cash awards in an amount, and with such performance criteria, determined in its discretion, it is not possible at present to determine the persons to whom awards will be granted under the Compensation Plan for the fiscal year ending June 30, 2017, or the amounts and performance criteria of any such individual grants. Alternatively, because the Compensation Plan, if approved, would be substantially similar to the current version of our Compensation Plan, the new plan benefits table instead sets forth the Awards made in the fiscal year ended June 30, 2016, as follows: New Plan Benefits Executive Bonus Compensation Plan Name and Position Dollar Value(1) Thene, Tony R. President and Chief Executive Officer $140,630 Audia, Damon J. Senior Vice President and Chief Financial Officer $ 45,884 Haniford, Joseph E. Chief Operating Officer $ 60,259 Lain, Timothy Vice President, Controller and Chief Accounting Officer $ 28,952 Strobel, David L. Former Senior Vice President and Chief Technology Officer $ 65,859 Ziolkowski, Andrew T. Former Senior Vice President – Special Projects $ 17,740 Executive Group (NEOs) $359,324 Non-Executive Director Group $ 0 Non-Executive Officer Employee Group $155,575 (1) Reflects the actual amount received based on 20.4% attainment of target performance goals. Vote Required for Approval The affirmative vote of a majority of the votes cast is required to approve the proposed amendments to the Executive Bonus Compensation Plan. Unless and until such stockholder approval is obtained, no qualified performance-based compensation will be paid pursuant to this Compensation Plan. The Board of Directors recommends that you vote FOR Proposal 5 to approve the 50 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT [2] FOR Amended and Restated Executive Bonus Compensation Plan.

Compensation Committee Report The Compensation Committee of the Board of Directors (which meets the NYSE and SEC requirements for compensation committees) has reviewed and discussed the following Compensation Discussion and Analysis (“CD&A”) with management, legal counsel, and its independent compensation consultant. The Committee also considered the results of the 2015 say-on-pay vote and input from stockholder engagement during the last year when reviewing the CD&A. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference into our 2016 Annual Report on Form 10-K. Submitted by the members of the Compensation Committee, Chair: Kathryn C. Turner Members: Philip M. Anderson Jeffrey Wadsworth Stephen M. Ward, Jr. 51 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Compensation Discussion and Analysis This Compensation Discussion and Analysis (“CD&A”) complies with requirements of the US Securities and Exchange Commission (“SEC”).  This CD&A also coverscontains information about our compensation philosophy and key criteria considered by the Compensation Committee (“Committee”) to set compensation levels, determine actual compensation and establish future compensation opportunities for our executives. In making those decisions, and in guiding management to include a transparent discussion of the decisions in this CD&A, the Committee considered input from last year’s say-on-pay vote, stockholder engagement during the fiscal year, itsour independent compensation consultant and the Board’s independent governance consultant.

Damon J. Audia, Joseph E. Haniford, Chief Operating Officer (formerly Senior Vice President – Specialty Table of Contents Executive Summary.............................................................................................................................................................53 Our Fiscal Year 2016 Business Performance ........................................................................................................................53 Pay for Performance Alignment ...........................................................................................................................................54 Executive Compensation Highlights ....................................................................................................................................55 Stockholder Engagement on Compensation and Advisory Vote on Executive Compensation (“Say-on-Pay”) ....................56 Our Compensation Philosophy ............................................................................................................................................57 Our Compensation Policies and Practices ...........................................................................................................................58 Compensation Program Risk Assessment ..........................................................................................................................60 Our Compensation Process.................................................................................................................................................61 Elements of Our Fiscal Year 2016 Compensation Program..................................................................................................64 Our Fiscal Year 2016 Target Compensation Strategy and Pay Mix .......................................................................................65 Annual Compensation .........................................................................................................................................................66 Long-Term Equity Incentive Compensation .........................................................................................................................68 Other Compensation ...........................................................................................................................................................71 Retirement and Post-Employment Benefits ........................................................................................................................71 52 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Our Named Executive Officers and CEO Transition

As discussed under the “Succession Planning and Appointment of a New Chief Executive Officer” section on page 18, during the last fiscal year, one CEO resigned, an independent director stepped in as interim CEO, and then the CFO was promoted to CEO.  As a result of this transition over the course of fiscal year 2015 and pursuant to the disclosure requirements of the SEC rules, this year’sOur Named Executive Officers (“NEOs”) list includes certain individuals who are no longer employed by the Company or who no longer serve as executive officers of the Company.  Our NEOs for fiscal year 2015 are2016 are: Tony R. Thene,Timothy Lain, President and Chief Executive Officer Vice President, Controller and Chief Accounting Officer (served as follows:Acting Chief Financial Officer from July 1 – October 18, 2015) Senior Vice President and Chief Financial Officer Andrew T. Ziolkowski, Former Senior Vice President – Special Projects (retired effective September 1, 2015) Alloys Operations) David L. Strobel, Former Senior Vice President and Chief Technology Officer (retired effective August 5, 2016)

Due to the SEC rules and the CEO transition, this CD&A and the related compensation tables and narratives cover six NEOs forExecutive Summary Our Fiscal Year 2016 Business Performance As a result of actions taken during fiscal year 2015 and analyze a variety of compensation decisions and actions, some of which were made specifically in reaction to2016, Carpenter closed the transition.  Not all of the NEOs participated in or received all of the compensation elements described in this CD&A.  For example, Mr. Pratt received a focused CEO compensation package for his service as interim CEO during the year, but did not participate in many of the compensation programs in which our other NEOs participated.

29

·                  We announced the authorization of a $500 million two year share repurchase program. We purchased 3 million of our shares for $124.5CompensationMDaiisncuSsescitoionn&TiAtlnea[lHys1i]s •• SEuxbesceucttivioenSTuitmlem[Har2y] Stockholder Value Creation million in fiscal year 2015.

·                  We strengthened our “continuous improvement process” in Januaryshare 2015 with the introduction of the Business Management Office (BMO). The BMO is focused on profit optimization, operating cost improvement and inventory reduction.

Highlights of our Compensation Philosophy and6.9% 2016 Pay for Performance Alignment of Pay with Performance

The Compensation Committee’s philosophy for Carpenter’sOur executive compensation program includes strong ties to pay for performance, driving team performance and attracting/retaining executives who can drive the company’sour performance. Each NEO’s total compensation is targeted to the market median. Carpenter’s performance-driven compensation program has maintained a strong alignment between company performance, as measured by stockholder value creation and key financial metrics, and total direct compensation (“TDC”). Individual and Company Pay for Performance Criteria We balance long-term and short-term incentive awards to structure compensation that pays for performance using both individual and company performance criteria. Carpenter’s fiscal year 2016 compensation structure was aligned with our operational performance as well as our total stockholder return performance. 54 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT COMPANY PERFORMANCE METRICS CRITERIA f Operating Income f Free Cash Flow f Adjusted EBITDA f Safety Metric (measured by Total Case Incident Rate (TCIR)) f Total Shareholder Return INDIVIDUAL PERFORMANCE CRITERIA f Successful execution of key strategic goals f Leadership capability f Individual contribution to both short-and long-term business results f Ethical conduct, regulatory compliance Total Stockholder Return Carpenter % Rank21st 25thMedian75th TSR -3.6%19.9% 51.3% Carpenter % Rank10th25thMedian75th TSR -25.6% -7% 20.2% 62.3% Capital Returned to Stockholders in 2016 $124 repurchases +35 million in dividends $159 million

Compensation Discussion & Analysis • Executive Summary Pay Mix A substantial portion of the target total compensation is delivered through variable performance-based incentives that are at riskrisk. Target Direct Compensation Mix – CEO Target Direct Compensation Mix – NEO* Stock Options 9% Stock Options 15% Base Salary 19% Base Salary 36% Performance RSUs 28% Long-term/Equity Short-term/Cash Long-term/Equity Short-term/Cash 61% 39% 38% 62% Target Bonus 19% Performance RSUs 46% Target Bonus 27% Performance Contingent 81% Performance Contingent 64% * Represents target pay mix for the current CEO it is 80%Messrs. Audia, Haniford, Lain and for other executives it ranges from 50% to 80%.  Carpenter’s performance-driven compensation program has maintained a strong alignment between Company performance, as measured by stockholder value creation and key financial metrics, and total direct compensation (“TDC”).  TDC consists of base salary, target annual cash incentive and the grant date target value of long-term incentive awards.

Strobel. 2016 Compensation Decisions Pay Element Fiscal Year 2015 NEO2016 Compensation Decisions Executive Compensation Highlights

Consistent with the performance-driven compensation strategy described below, Carpenter’s fiscal year 2015 compensation structure was aligned with the Company’s operational performance as well as its total stockholder return performance.

Base Salary Highlights

Base salary increases from fiscal year 2014 to 2015 for our NEOs averaged 3%.  Mr. Heasley’s base salary increased by 2%.  Base salary for Messrs. Wulfsohn, Strobel, Key Executive Compensation Practices 55 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT f Median Compensation Targetsf Annual Review of Compensationf No Repricing f Robust and Ziolkowski were increased by 3%, consistent with the merit wage increases generally implemented for the Company’s salaried employees.  Mr. Thene in his role as Chief Financial Officer (“CFO”) received a 4% increase to reflect changing competitive market pay levels.  Mr. Pratt received a monthly base salaryDiversified Consultant Independencef Market-competitive Retirement Performance Metrics f Annual Review of $25,000 during his tenure as interim President and CEO.

CompensationPrograms f Substantial Share Ownership Peer Groupf Limited Perquisites Guidelinesf No Hedgingf Stockholder Outreach on f Use of Double Triggersf No PledgingExecutive Compensation Annual Cash Incentive Highlights

Each year the Committee establishes performance metrics that focus our executives on the key drivers of our business.  Fiscal year 2015 performance metrics (as detailed in the “Annual Cash Incentive” section) were focused on operational efficiency metrics.

For fiscal year 2015, year-end results for Carpenter’s ExecutiveIncentivesExecutive Bonus Compensation Plan (“EBCP”Compensation Plan”) resulted in 20%attainment at 20.4% of target incentive attainment.  This compares to a higher attainment in fiscal year 2014 when a target incentive of 55% was attained.  Mr. Pratt did not participate in this program during his service as interim President and CEO.

30

CompensationMDaiisncuSsescitoionn&TiAtlnea[lHys1i]s •• SEuxbesceucttivioenSTuitmlem[Har2y] Fiscal Year 2016 Compensation Highlights We redesigned the Long-term Incentive Plan beginning with fiscal year 2016 grants. These new changes include: f Replaced EPS goal with Adjusted EBITDA; and f Added time-based RSUs to LTI components. New Changes to Performance Metrics Incentive Program Financial Metric Weighting New Peer Group for 2017 Our Compensation Committee and outside compensation for serving as interim Presidentconsultants assessed our peer comparator group and CEO and transitioning CEO responsibilitiesestablished a new Peer Group to Mr. Thene, and in lieu of participation inmore accurately reflect Carpenter’s specialty business. The Committee also solicited feedback from investors through our stockholders outreach program. To review the Company’s regular LTI program, Mr. Pratt received two stock option awards, one of which was granted at fair market value at the time of grant with an exercise price of $40.42 per shareselection criteria and the othernew list of which was granted at 25% over fair market value at the time of grant with an exercise price of $50.53 per share.  One-fourth of the optionspeer group companies, please see p. 62 under each award vested immediately upon grant“How We Benchmark Compensation”. Stockholder Engagement on Compensation and the remaining options under each award will vest in one-ninth increments on the 1st day of each month over a 9-month period, provided that Mr. Pratt still serves as interim CEO or an employee of the Company assisting Mr. Thene during a transition period at the time of each such vest date.

Compensation Governance Practices

Our executive compensation program reflects the Board’s strong commitment to good governance.  During 2015, we made certain enhancements based in part on stockholder feedback, including elimination of single trigger change of control payments.  Highlights of compensation governance are as follows:

31

Based on the stockholder engagement feedback, as well as advice from the Compensation Committee’s independent compensation consultant and the Board’s independent governance consultant, important enhancements were made in the Company’s compensation governance.  One was a change in Compensation Committee membership.  Steven Karol was a member of the Committee and met certain legal requirements for independence.  However, we learned that stockholders and certain proxy advisory firms were not comfortable with his characterization as independent and his membership on the Committee.  As a result, Mr. Karol resigned his committee memberships on both the Compensation Committee and the Corporate Governance Committee.  A second change was the elimination of single triggers for change in control payments.

Discussion & Analysis • Our Compensation Philosophy and Objectives

Our Compensation Philosophy Our Guiding Principles The overarching principle in theof our compensation philosophy is to drivedriving long-term high performance and stockholder value through theour pay programs and the corporate culture. As a result, there are strong ties to performance in many aspects of the compensation program, including pay levels, incentive payouts and pay opportunities.

The Compensation Committee structures the executive compensation program to reward our senior leaders modestly when they meet annual financial and operational goals and create long-term value for our stockholders and to reward them more substantially when the goals are exceeded. A significant component of this incentive structure is weighted towards overall leadership team performance against targeted goals so that if we meet or exceed our goals, the team earns target or better awards and conversely,awards. Conversely, if the team fails to meet the minimum thresholds, that component of performance-based compensation may not be awarded. In general, the Compensation Committee targets total NEO compensation at the median of an individual’s market reference point. The Committee considers an executive to be within the range of market median if his/her total compensation is +/-15% of the market data reference point.

32

·                 Reinforce the importance of accountabilityCompensation Discussion & Analysis • Our Compensation Policies and team cooperation by tying a significant portion ofPractices Our Compensation Policies and Practices Our executive compensation program reflects the Board’s strong commitment to overall Company performance;

·                 Motivate, attractgood governance. During fiscal year 2016, we continued with the following best practices: Compensation Best Practices Balanced Portfolio The program design provides a balanced mix of cash and retain talented leaders who can drive the implementation of our growthequity, annual and longer-term incentives, and performance metrics (financial and operational excellence strategies;

·                  Reward individual performancegoals, in addition to Adjusted EBITDA and accomplishments, while also emphasizing teamwork andTSR). The compensation program does not include Section 280G or any other change in control tax gross-ups to our executives. No Excise Tax Gross-Ups A change in control of the Company’s overall success; and

·                  Keepingcompany alone does not trigger any severance obligations to our NEOs under the compensation packages competitive with that offered by our peers and other companies with which we compete for talent.

Our Compensation Process

RoleChange in Control Severance Plan. Use of CompensationDouble Triggers Committee

Discretion to Reduce Annual Cash Incentive The Compensation Committee retains discretion to reduce, but not increase, annual cash incentive payouts in appropriate circumstances. No Dividend Payments on Unearned Awards We do not pay or accrue dividends on unearned restricted stock units. Limited Perquisites We provide a minimal level of perquisites to our NEOs, consisting primarily of financial and tax counseling, tax preparation, medical examinations and relocation expenses. Equity Ownership Guidelines We maintain equity ownership guidelines that require that Corporate Vice Presidents and above achieve an equity ownership level, over a five-year period, equal to a certain multiple of base salary. For the CEO, the level is charged with setting all executive officer pay5x base salary; for Senior VPs, 3x base salary; and reviewing all executivefor Corporate VPs, 2x base salary. No Hedging/Pledging of Company Stock Our policy prohibits hedging or pledging of Carpenter stock by NEOs and non-employee directors. No Option Repricing Our long-term incentive plan does not permit repricing of stock options without stockholder approval. Additionally, the plan does not permit the company to offer a cash buyout of underwater options. Independent Compensation Consultants We engage independent compensation in accordance with its charter, which can be found on our website at: http://www.cartech.com.consultants to provide information for the Committee’s work, including a peer group analysis, market compensation data, and analysis of various compensation instruments and metrics. Risk Assessment The Compensation Committee oversawreviews an annual assessment by the design and developmentindependent compensation consultant of our fiscal year 2015 NEOthe compensation program plus gave special consideration to our CEO transitionscheck that metrics and goals are appropriate to drive high performance without encouraging risk-taking beyond established risk parameters. The Compensation Committee, with the input of outside consultants, reviews these requirements regularly and continues to believe these levels are competitive with the market. Annual Assessment of Compensation Consultant Independence and Conflict of Interest The Compensation Committee believes that there was no conflict of interest between Carpenter and either Pearl Meyer & Partners (“PM”) or Compensation Advisory Partners LLC (“CAP”) during fiscal year 2015.2016. In reaching this conclusion, the Compensation Committee considered the factors set forth by the SEC and NYSE regarding compensation advisor independence. Specifically, the Compensation Committee has analyzed whether the work of PM or CAP as compensation consultants raised any conflict of interest, taking into consideration the following factors: f the provision of other services to Carpenter by the consultant; f the amount of fees Carpenter paid to the consultant as a percentage of the consultant’s total revenue; f the policies and procedures of the consultant that are designed to prevent conflicts of interest; 58 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Compensation Discussion & Analysis • Our Compensation Policies and Practices f any business or personal relationship of the consultant or the individual compensation advisors employed by the consultant with an executive officer of the company; f any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and f any Carpenter stock owned by the consultant or the individual compensation advisors employed by the consultant. Equity Ownership Guidelines Equity awards earned through Carpenter’s long-term incentive program help NEOs and other executives meet their equity ownership guideline requirements. These guidelines require that Corporate Vice Presidents and above hold specific values of equity expressed as a multiple of the executive’s base salary. Holdings may consist of either earned restricted or unrestricted stock or stock units, including shares held in retirement accounts, and there is a five-year phase-in period after the NEO is elected for satisfying the minimum equity holding requirements. Messrs. Thene, Audia, Haniford and Lain are in their respective phase-in periods. The Compensation Committee, also has anwith the input of outside consultants, reviews these requirements regularly and continues to believe these levels are competitive with the market. Robust Stock Ownership Requirements Executive Compensation Subcommittee forLevel Multiple of Base Salary Chief Executive Officer 5x Senior Vice Presidents 3x Corporate Vice Presidents 2x Hedging/Pledging Policy Executive officers (including NEOs) and directors are prohibited from hedging their ownership of Carpenter stock, including short sales (a sale of securities that are not then owned) of Carpenter securities, “a sale against the purpose of reviewing and approving NEO performance-based awards and equity grants and for facilitating compliancebox” (a sale with certain exemptions from the deduction limitations of Section 162(m)delayed delivery of the Internal Revenue Code.  All membersCarpenter securities) and the purchase of financial instruments (i.e. prepaid variable forward contracts, collars, equity swaps and exchange funds) that are designed to hedge or offset any decrease in the market value of the Executive Compensation Subcommittee are “independent”company’s stock. In addition, no NEO or director may trade in “puts” or “calls” (publicly-traded options to sell or buy stock) in Carpenter securities or pledge company stock for purposes of NYSE listing rules anda loan using the company stock as the collateral for such a loan. Tax Policies TAX DEDUCTIBILITY OF COMPENSATION To the extent that the aggregate compensation subject to Section 162(m) of the Code paid to any NEO (other than our principal financial officer) exceeds $1 million, it is not deductible by the company for federal income tax purposes unless it is “performance-based” as defined in the Code. Cash incentives and RSU grants are non-employee Directorsperformance-based only if they are earned based on achieving objective goals under stockholder approved plans. Cash incentives granted under the Compensation Plan and stock options and performance-based RSUs granted under the Executive Stock Plan are intended to qualify as performance-based compensation under the Code, provided that our stockholders have approved each Plan. The tax laws do not require that all incentive compensation be deductible, and other components of compensation may not be deductible under the Code. The Compensation Committee generally intends to comply with regulations to make as much compensation deductible as can be achieved under the Code and related regulations. However, if the Compensation Committee determines that it is advisable to grant a non-deductible component of pay to advance the overall interests of the business, then it reserves the right to do so. All incentive pay was deductible for purposesfiscal year 2016. 59 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Compensation Discussion & Analysis • Compensation Program Risk Assessment Compensation Program Risk Assessment The Board’s Compensation Committee reviews an annual assessment of Section 16(b).  This independence enables themour compensation programs by an independent compensation consultant, in this fiscal year CAP provided such assessment, to check that metrics and goals are appropriate to drive high performance without encouraging risk-taking beyond established risk parameters. In each review of Carpenter’s compensation program, the consultant concluded that it was not reasonably likely that the company’s compensation policies and practices would have a materially adverse effect on the company. Consultant Analysis of Risk Concepts in Carpenter Compensation Design Compensation Element Balanced Approach Balance Achieved Experience appropriate. performance recognizes external executive’s (group’s) impact Short-term (1 year) Intermediate (2 to 4 years) Long-term (>5 years) Less emphasis on short-term goal attainment. Varying time horizons help mitigate risk. Time Horizon Sustainable Performance Additionally, the Committee considers these elements to be objective representativesimportant in discouraging excessive risk: Code of Business Conduct and Ethics We are a performance-based company and hold each other accountable to high standards of excellence in all that we do. Our Code of Business Conduct and Ethics reflects our corporate culture. The Compensation Committee believes that Carpenter’s values-oriented culture is a key factor in reducing risky behavior. Performance Goals and Variable Pay Mix We set our performance goals at levels that are high enough to encourage strong performance, but are within reasonably attainable levels to discourage risky business strategies or actions. The majority of our performance incentives are long-term, which encourages our executives to engage in business strategies or actions that promote long-term growth over actions that may produce risky short-term outcomes. Stock Ownership Guidelines Our NEOs are required to hold substantial amounts of equity. We believe that stock ownership encourages appropriate decision-making that aligns with the long-term interests of our stockholders. The term60 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Performance Metrics Growth Profitability Compensation Committee as used herein also refersprogram does not inappropriately emphasize performance along one metric. Returns Stockholders’ Target Setting Internal Perspective External Perspective Objectives are meaningful and Pay outcomes make sense. Measurement Approach Absolute Performance Relative Performance Enables executive team to the Executive Compensation Subcommittee as appropriate.unite behind shared absolute goals and conditions impacting industry. Vehicle Selection Cash Equity Individual pay mix balances an on company results, link to stockholders’ experience and risk/ reward profile. Annual Long-Term

RoleCompensation Discussion & Analysis • Our Compensation Process Peer Group Compensation Benchmarking Annual benchmarking of the Full Board

compensation program target levels ensures consistency with our peer group. Our Compensation Process We have a rigorous review process for determining executive compensation using both internal and external resources. The Compensation Committee considers input from the full board when making decisions.  Particularly, the Committee considers input:

·                  from those with expertisevarious roles in the industry when determiningour compensation process are detailed below. what will drive long-term high performance or what might encourage too much61 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Roles of Compensation Consultants For fiscal year 2016 determinations, the Compensation Committee engaged Pearl Meyer & Partners (“PM”), an outside compensation consulting firm, to conduct a competitive assessment of our executive compensation program for the NEOs and to make recommendations for the Committee’s review and approval. PM was also retained to update and review peer group member companies, and to provide advice as needed to the Compensation Committee on an ongoing basis, including but not limited to guidance on our CEO compensation package. PM also regularly attends Compensation Committee meetings to provide advice and guidance on Carpenter’s executive compensation program. Separately, the Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”), an outside compensation consulting firm, to conduct a TSR analysis and an annual risk taking;assessment of Carpenter’s compensation programs. CAP also regularly attends Compensation Committee meetings to provide advice and

·                  from those with more interaction with a particular executive when considering his/her performance, such as from Audit/Finance Committee members when considering information on compensation trends and regulatory developments in the CFO’s performance.

33

Benchmarking

Compensation Discussion & Analysis • Our Compensation Process How We Benchmark Compensation In developing competitive compensation recommendations with respect to the NEOs, the consultants establishedestablish a benchmark match for each position based on a broad perspective of the relevant market and detailed competitive survey data and proxy disclosures of peer companies, for each of the following elements of compensation:

· f base salary;

· f target annual cash incentive;

· f target total cash compensation;

· f expected value of long-term incentives; and

· f target total direct compensation.

The Compensation Committee accepted the consultants’ recommendations that itrecommendation to use a comparator group for competitive compensation analysis that consists of nine public companies that manufacture and sell specialty metals and related products and that draw upon similar executive talent (the “Comparator Group”) which was

unchanged from fiscal year 2014.. The Comparator Group used by the Compensation Committee for fiscal year 20152016 consisted of the below public companies operating in various parts of the world with median revenue of $1.8$2.2 billion. PEER GROUP These companies were selected for inclusion in the Comparator Group based on industry, size, US-based headquarters, with a particular focus on companies with which Carpenter competes for executive talent, customers and/or investor capital.

We note that going forward the Comparator Group will be adjusted to reflect the fact that RTI and $ in millions Company Name 2015 Revenue Market CAP as of 6/30/16 Precision Castparts Corp. have been* (“PCC”) $10,005 n/a Allegheny Technologies Inc. 3,720 $ 1,388 $ Cabot Corporation 2,871 $ 2,849 $ Kennametal Inc. 2,647 $ 1,762 $ Hexcel Corp. 1,861 $ 3,869 $ Kaiser Aluminum Corporation 1,392 $ 1,626 $ Barnes Group Inc. 1,194 $ 1,778 $ RTI International Metals, Inc.** (“RTI”) 818 n/a $ Haynes International, Inc. 488 401 $ $ Carpenter Technology Corp. 2,227 $ 1,534 $ *PCC was acquired and the Compensation Committee will continue to review the group for further appropriate changes.by Berkshire Hathaway in January 2016 **RTI was acquired by Alcoa in July 2015 INDIVIDUAL PERFORMANCE CRITERIA While the Compensation Committee uses benchmark data as a reference point, it is not the sole determining factor in making our executive compensation decisions. In fiscal year 2015, the benchmark data discussed below was not used for purposes of determining Mr. Pratt’s compensation as interim President and CEO.

In addition to the market reference point, the Compensation Committee also considers an individual’s performance and their criticality to the organization as further discussed below.organization. Our individual performance criteria includes: f Successful execution of key strategic goals f Leadership capability f Individual contribution to both short-and long-term business results f Ethical conduct, regulatory compliance 62 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

Compensation Discussion & Analysis • Our Compensation Process The market data is used primarily to ensure that, in totality, our executive compensation program is competitive when the Companycompany achieves targeted performance levels. We will be using the following peer group for fiscal year 2017 compensation benchmarking: 63 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT 2017 Peer Group Companies ConstructionSteel Engineering & ChemicalsAK Steel Holding CabotAlleghenyTechnologies Valmont Industries Cliffs Natural Resources Haynes International Industrial Machinery Suncoke Energy Barnes Group Kennametal The Timken Company Aerospace, Aircraft & Defense HexcelAluminum KLXCentury Aluminum Wesco Aircraft HoldingsKaiser Aluminum New Peer Comparator Group for 2017 The Compensation Committee and its outside compensation consultants, PM, assessed our peer comparator group and decided to create a new peer group that would more accurately reflect Carpenter’s specialty business. The Committee also solicited feedback from our Chairman and other Committee Chairs, our CEO, CFO, General Counsel, Chief Governance Officer and Investor Relations team, as well as feedback from investors through our stockholders outreach program. The following factors influenced their decision: The loss of 2 companies from our 2016 peer group, PCC & RTI Since both PCC and RTI were acquired, our peer group was reduced to seven companies, a size that the Board considered too small for compensation benchmarking. Peer group size A group of 10-20 companies provides a broad perspective of industry pay levels and plan practices Peer group criteria f Revenue size: 0.5x to 2x revenue with limited exceptions f Companies that Carpenter competes with for investor capital and executive talent f Specialty manufacturing companies and companies that serve similar markets f Solutions-rather than commodity-based companies, to the extent practical f Market capitalization in excess of $300M, and f U.S. based companies due to varying levels of disclosure of compensation practices for non-U.S. companies.

KeyCompensation Discussion & Analysis • Elements of Ourour Fiscal Year 20152016 Compensation Program

The Company’s Elements of our Fiscal Year 2016 Compensation Program Our compensation program is designed to be competitive and align the interests of our executive officers and other senior leaders with Companycompany performance and stockholder returns. For our NEOs, this is accomplished through a mix of base salary and time-and performance-based rewards, including time-and performance-based cash incentives and equity awards, as well asawards. We also provide minimal perquisites, retirement plans and post-employment benefits.benefits that are not intended to be the focus of the program. Performance-based compensation (annual and long-term) continues to constitute the largest portion of total compensation. A brief overview of each element of compensation is provided in the chart below, with further details provided later in this CD&A.

Overview of Key Compensation Elements - Overview

Compensation Element Description Rationale date of grant; and price increases; and growth index over a three-year period; and performance far exceeds that of the growth (25% of LTI) achieved compared to our annual Adjusted to stockholder value creation; Units* (25% of LTI) vest date. (25% of LTI) * Dividends are not paid or accrued on these RSUs until the RSUs are earned. 64 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT SHORT-TERM Base Salaryf Fixed component of pay targeted at the f Provides compensation for executive to median of the market. perform his/her job functions. Annual Cash Incentivef Delivered in cash annually;f Rewards for achievement of key drivers of f Tied to achievement of financial andlong-term value; and operational goals (operating income, free f Provides strong line-of-sight and reinforces cash flow and safety metrics); andkey priorities of the organization. f Executives can earn 0-200% of their target award based on achievement of pre-established targets. LONG-TERM Stock Optionsf Granted with an exercise price equal to the f Provides strong tie to stockholder value as (25% of LTI)fair market value of Carpenter stock at the executives only realize value if the stock f Vests ratably over three years.f Vesting period assists with retention. TSR-Based Restrictedf Executives can earn 0-200% of their target f Provides strong tie to stockholders as it Stock Units* award based upon our TSR compared to aonly delivers maximum value if our stock f Immediately vests at the end of the three-index; and year period, if earned.f Performance period assists with retention. Adjusted EBITDA-f Executives can earn 0-200% of their target f Focuses executives on achievement of our Based Restricted Stockaward based upon actual Adjusted EBITDAAdjusted EBITDA goal, which is strongly tied EBITDA goal;f Provides line-of-sight as senior leaders f If an award is earned at the end of the first have the greatest ability to drive Adjusted year, the award will vest 50% over each of EBITDA; and the next two years; andf Vesting period assists with retention. f May elect to receive payment in cash or stock. Time-Based Restrictedf 100% vest three years from grant date,f Vesting period assists with retention. Stock Units subject to continued employment on the

Compensation Discussion & Analysis • Our Fiscal Year 20152016 Target Compensation Strategy and Pay Mix

Our Fiscal Year 2016 Target Compensation Strategy and Pay Mix The Compensation Committee developed fiscal year 20152016 compensation levels by taking into account theour general philosophy and objectives summarized above.objectives. The Compensation Committee benchmarked against the Comparator Group and survey data, and took into account the differing fiscal years of members of the Comparator Group, which complicates financial and compensation comparisons when there is a significant shift in customer demand or commodity costs.

NEO pay is generally targeted to be within the competitive range (+/- 15%-15%) of market median. In isolated circumstances, we will deviate from the target pay positioning based on several factors, including:

· f Attraction and retention needs;

· f Individual performance; and

· f Internal equity issues.

The Compensation Committee established fiscal year 20152016 compensation components for the NEOs relative to the Comparator Group and survey data as follows:

· f Base salary approximating the 50th50th percentile, reflecting the Company’sour desire to provide competitive fixed compensation to motivate, attract and retain talent;

· f Target total cash compensation (consisting of base salary plus target annual cash incentive) approximating the 50th50th percentile; and

· f Target total direct compensation (consisting of target total cash compensation plus the target value of long-term equity incentives) approximating the 50th50th percentile.

Target Total Direct Compensation A compensation program (as illustrated below) which targets market median positioning, but delivers the majority of that compensation through performance-based compensation elements ensures proper alignment with our stockholders and ties the ultimate value delivered (above/below target) to NEOs to Companycompany performance.

Positioning of Mr. Lain’s compensation relative to medianpackage for each of the NEOs is provided below :

*At the beginning of the year, compensation for Messrs. Wulfsohn and Heasley were targetedhis role as shown above.  Their employment with the Company terminated on December 31, 2014, and February 28, 2015, respectively.  The pay package of Mr. Pratt as interim President and CEOacting CFO is not shown above assince his interim compensation package was specific to the nature of thehis interim tenure.role and was not benchmarked. Mr. Ziolkowski’s compensation package is not shown above since his position was not benchmarked due to his retirement. 65 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT Compensation Positioning Relative to Median for each of our NEOs: ExecutiveBase SalaryTarget Total Target Total Direct Cash CompensationCompensation (Salary + Target Annual(Target Total Cash Cash Incentive)Compensation + Grant Date Value of Target Long-term Incentive) Median Median Median Tony R. Thene-23% -25% -18% Damon J. Audia-8% -2% -7% Joseph E. Haniford-6% -14% -14% David L. Strobel 1% 18% 19%

As mentioned above, individualCompensation Discussion & Analysis • Annual Compensation Individual compensation levels for each NEO may vary based on performance. The Compensation Committee may further differentiate the performance of NEOs through multiple mechanisms, including:

· f Committee Discretion to Reduce Annual Cash Incentive: The Compensation Committee retains discretion to reduce, but not increase, annual cash incentive payouts in appropriate circumstances.

·circumstances; f Committee Discretion to Reduce LTI: The Compensation Committee retains discretion to reduce, but not increase, performance-based equity payouts in appropriate circumstances; and f The ability to grant equity awards, upon the CEO’s recommendation, including RSUs and stock options, to top performers.

Annual Compensation Base Salaries

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

The Compensation Committee considered these factors in setting salaries for fiscal year 2015,2016. Fiscal Year 2016 Base Salary Compensation Decisions Meaningful changes were made to our senior management team in fiscal year 2016 and, awarded the NEOsas a result, changes to NEO base salary increases averagingcompensation included the following: f Mr. Thene’s base salary increased by 49% due to his promotion to the position of President and CEO. f Mr. Lain’s base salary increased by 5% due to increased financial responsibilities as VP, Controller and Chief Accounting Officer. In addition, Mr. Lain received a temporary base salary increase of $6,923 per pay period from 7/1/15 to 10/18/15, the period during which he was acting CFO. f Mr. Strobel’s base salary increased by 3%, consistent with the merit wage increases generally implemented for the Company’sCarpenter’s salaried employees. Mr. Thene received a 4% base salary increasef Messrs. Audia and Mr. Heasley, whoHaniford both joined Carpenter during the company in fiscal year 2014, received a 2% base salary increase.

During his tenure as interim President and CEO in fiscal year 2015, Mr. Pratt’syear. Each NEO’s base salary was $25,000 per month, which is identicalset after consideration of recommendations based on an established benchmark match for each position. Mr. Ziolkowski did not receive a salary increase due to the base salary paid to him in 2009 – 2010 when he previously served as our interim President and CEO.  If benchmarked against our peer companies, his annualized salary would fall well below the 15th percentile.

retirement. Annual Cash Incentive

The Company – Executive Bonus Compensation Plan (“EBCP”) Carpenter maintains an Executive Bonus Compensation Plan (“EBCP”) because it believeswe believe that a significant portion of a NEO’sour NEOs potential compensation should be contingent on Companycompany business results and his or hertheir successful leadership of the Company’s business thatour business. This is what will ultimately drivesdrive long-term value for our stockholders. The Compensation Committee oversees the EBCPplan and establishes the metrics that will be used each year, with input from management and outside compensation consultants. For fiscal year 2015,2016, the metrics, the respective weightings, and the rationale for the selection of each metric for the NEOs (with the exception of Mr. Pratt who served as interim President and CEO) are detailed below. 66 CARPENTER TECHNOLOGY 2016 PROXY STATEMENT

While interim President and CEO, Mr. Pratt did not participate in the EBCP due to the unique nature of his role and the uncertain tenure associated with it.

Compensation Discussion & Analysis • Annual Compensation Fiscal Year 20152016 Annual Cash Incentive Metrics Summary