def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a)
of the Securities Exchange Act of 1934
Filed by the
Registrant þ
Filed by a Party other
than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of
the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Allegheny Technologies Incorporated
(Name of Registrant
as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing
Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each
class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing. |
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1000 Six PPG Place
Pittsburgh, PA
15222-5479
April 2, 2010
To our Stockholders:
We are pleased to invite you to attend Allegheny Technologies
Incorporateds 2010 Annual Meeting of Stockholders. The
meeting will be held at 11:00 a.m., Eastern Time, on
Friday, May 7, 2010, in the William Penn Ballroom (on the
William Penn Level), Omni William Penn Hotel, 530 William Penn
Place, Pittsburgh, Pennsylvania 15219. The location is
accessible to disabled persons.
This booklet includes the notice of meeting as well as the
Companys Proxy Statement. Enclosed with this booklet are
the following:
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Proxy or voting instruction card (including instructions for
telephone and Internet voting), and
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Proxy or voting instruction card return envelope (postage
pre-paid if mailed in the U.S.).
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A copy of the Companys Annual Report for the year 2009 is
also enclosed.
Your Board of Directors recommends that you vote:
(1) FOR the election of the three director nominees named
in this Proxy Statement (Item A);
(2) FOR the approval of the Amended and Restated 2007
Incentive Plan (Item B); and
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(3)
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FOR the ratification of the selection of Ernst & Young
LLP to serve as the Companys independent auditors for 2010
(Item C).
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This Proxy Statement also outlines many of the corporate
governance practices at ATI, discusses our compensation
practices and philosophy, and describes the Audit
Committees recommendation to the Board regarding our 2009
financial statements. We encourage you to read these materials
carefully.
We urge you to vote promptly, whether or not you expect to
attend the meeting.
If you are a stockholder of record and plan to attend the
meeting, please mark the appropriate box on the proxy card, or
enter the appropriate information by telephone or Internet, so
that we can send your admission ticket to you before the meeting.
We look forward to seeing many of you at the 2010 Annual Meeting.
Sincerely,
L. Patrick Hassey
Chairman, President and Chief Executive Officer
ALLEGHENY
TECHNOLOGIES INCORPORATED
Notice
of Annual Meeting of Stockholders
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Meeting Date: |
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Friday, May 7, 2010 |
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Time: |
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11:00 a.m., Eastern Time |
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Place: |
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William Penn Ballroom
William Penn Level
Omni William Penn Hotel
530 William Penn Place
Pittsburgh, Pennsylvania 15219 |
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Record Date: |
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March 17, 2010 |
Agenda:
1) Election of three directors;
2) Approval of the Amended and Restated 2007 Incentive Plan;
3) Ratification of the selection of Ernst & Young
LLP as independent auditors for 2010; and
4) Transaction of any other business properly brought
before the meeting.
Admission
to the Meeting
Holders of Allegheny Technologies common stock or their
authorized representatives by proxy may attend the meeting. If
you are a stockholder of record and you plan to attend the
meeting, you may obtain an admission ticket from us by mail by
checking the box on the proxy card indicating your planned
attendance and returning the completed proxy card promptly, or
by entering the appropriate information by telephone or the
Internet. If your shares are held through an intermediary such
as a broker or a bank, you should present proof of your
ownership at the meeting. Proof of ownership could include a
proxy card from your bank or broker or a copy of your account
statement.
The approximate date of the mailing of this Proxy Statement and
proxy card, as well as a copy of ATIs 2009 Annual Report,
is April 2, 2010. For further information about Allegheny
Technologies, please visit our web site at
www.atimetals.com.
On behalf of the Board of Directors:
Jon D. Walton
Corporate Secretary
Dated: April 2, 2010
Table
of Contents
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A-1
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YOUR
VOTE IS IMPORTANT
Please vote as soon as possible. You can help the Company
reduce expenses by voting your shares by telephone or Internet;
your proxy card or voting instruction card contains the
instructions. Or complete, sign and date your proxy card or
voting instruction card and return it as soon as possible in the
enclosed postage-paid envelope.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON
MAY 7, 2010.
The proxy
statement and 2009 annual report of Allegheny Technologies
Incorporated are available to review
at: http://bnymellon.mobular.net/bnymellon/ati
PROXY
STATEMENT FOR
2010 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS
You can help the Company save money by electing to receive
future proxy statements and annual reports over the Internet
instead of by mail. See question 11 below.
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1.
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Who
is entitled to vote at the Annual Meeting?
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If you held shares of Allegheny Technologies Incorporated
(ATI or the Company) common stock, par
value $0.10 per share (Common Stock), at the close
of business on March 17, 2010, you may vote your shares at
the annual meeting. On that day, 98,539,807 shares of our
Common Stock were outstanding. Each share is entitled to one
vote. Stockholders do not have cumulative voting rights.
In order to vote, you must either designate a proxy to vote on
your behalf or attend the meeting and vote your shares in
person. The Board of Directors (Board) requests your
proxy so that your shares will count toward a quorum and be
voted at the meeting.
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2.
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How
do I cast my vote?
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There are four different ways you may cast your vote. You may
vote by:
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telephone, using the toll-free number listed on each proxy or
voting instruction card;
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the Internet, at the address provided on each proxy or voting
instruction card;
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marking, signing, dating and mailing each proxy or voting
instruction card and returning it in the envelope provided. (If
you return your signed proxy card but do not mark the boxes
showing how you wish to vote, your shares will be voted FOR the
election of the three nominees for director named in this Proxy
Statement, FOR approval of the Amended and Restated 2007
Incentive Plan, and FOR the ratification of the selection of the
independent auditors); or
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attending the meeting and voting your shares in person, if you
are a stockholder of record (that is, your shares
are registered directly in your name on the Companys books
and are not held in street name through a broker,
bank or other nominee).
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If you are a stockholder of record and wish to vote by telephone
or electronically through the Internet, follow the instructions
provided on the proxy card. You will need to use the individual
control number that is printed on your proxy card in order to
authenticate your ownership. The deadline for voting by
telephone or the Internet is 11:59 p.m., Eastern Time, on
May 6, 2010.
If your shares are held in street name (that is,
they are held in the name of broker, bank or other nominee), or
if your shares are held in one of the Companys savings or
retirement plans, you will receive instructions with your
materials that you must follow in order to have your shares
voted. For voting procedures for shares held in the
Companys savings or retirement plans, see question 6 below.
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3.
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How
do I revoke or change my vote?
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You may revoke your proxy or change your vote at any time before
it is voted at the meeting by:
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notifying the Corporate Secretary at the Companys
executive office;
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transmitting a proxy dated later than your prior proxy either by
mail, telephone or Internet; or
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attending the annual meeting and voting in person or by proxy
(except for shares held in street name through a
broker, bank or other nominee, or in the Companys savings
or retirement plans).
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The latest-dated, timely, properly completed proxy that you
submit, whether by mail, telephone or the Internet, will count
as your vote. If a vote has been recorded for your shares and
you submit a proxy card that is not properly signed and dated,
the previously recorded vote will stand.
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4.
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What
shares are included on the proxy or voting instruction
card?
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The shares on your proxy or voting instruction card represent
those shares registered directly in your name, those held on
account in the Companys dividend reinvestment plan and
shares held in the Companys savings or retirement plans.
If you do not cast your vote, your shares (except those held in
the Companys savings or retirement plans) will not be
voted. See question 6 for an explanation of the voting
procedures for shares in the Companys savings or
retirement plans.
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5.
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What
does it mean if I get more than one proxy or voting instruction
card?
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If your shares are registered differently and are in more than
one account, you will receive more than one card. Please
complete and return all of the proxy or voting instruction cards
you receive (or vote by telephone or the Internet all of the
shares on each of the proxy or voting instruction cards you
receive) in order to ensure that all of your shares are voted.
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6.
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How
are shares that I hold in a Company savings or retirement plan
voted?
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If you hold ATI Common Stock in one of the Companys
savings or retirement plans, you may tell the plan trustee how
to vote the shares of Common Stock allocated to your account.
You may either sign and return the voting instruction card
provided by the plan trustee or transmit your instructions by
telephone or the Internet. If you do not transmit instructions,
your plan shares will be voted as the plan administrator directs
or as otherwise provided in the plan.
The deadline for voting the shares you hold in the
Companys savings or retirement plans by telephone or the
Internet is 11:59 p.m., Eastern Time, on May 3, 2010.
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7.
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How
are shares held by a broker, bank or other nominee
voted?
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If you hold your shares of ATI Common Stock in street
name through a broker, bank or other nominee account, you
are a beneficial owner of the shares. In order to
vote your shares, you must give voting instructions to your
broker, bank or other intermediary who is the nominee
holder of your shares. The Company asks brokers, banks and
other nominee holders to obtain voting instructions from the
beneficial owners of shares that are registered in the
nominees name. Proxies that are transmitted by nominee
holders on behalf of beneficial owners will count toward a
quorum and will be voted as instructed by the nominee holder.
A majority of the outstanding shares present or represented by
proxy at the Annual Meeting constitutes a quorum. There must be
a quorum for business to be conducted at the Annual Meeting. You
are part of the quorum if you have voted by proxy or voting
instruction card. Abstentions, broker non-votes and votes
withheld from director nominees count as shares
present at the meeting for purposes of determining a
quorum.
The Board of Directors requests your proxy so that your shares
will count toward a quorum and be voted at the meeting.
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9.
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What
is the required vote for a proposal to pass?
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The director nominees receiving the highest number of votes will
be elected. Only votes for or withheld
affect the outcome. Checking the box on the proxy card that
withholds authority to vote for a nominee is the equivalent of
abstaining. Abstentions are not counted for the purpose of
election of directors.
With respect to approval of the Amended and Restated 2007
Incentive Plan (Item B), and ratification of the selection
of the independent auditors (Item C), stockholders may vote
in favor or against each of the
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proposals, or abstain from voting on the proposals. The
affirmative vote of the majority of shares present in person or
by proxy and entitled to vote at the Annual Meeting is required
for approval of the proposal. A stockholder who signs and
submits a ballot or proxy is present, so an
abstention will have the same effect as a vote against the
proposal.
When a broker holding your shares in its name as a nominee does
not have discretionary authority to vote your shares on a
particular proposal and the broker does not receive voting
instructions from you, your shares are referred to as
broker non-votes with respect to that proposal.
Under New York Stock Exchange rules, a broker holding your
shares in its name as a nominee is not permitted to vote your
shares in its discretion in the absence of voting instructions
on the election of directors (Item A), and on the approval
of the Amended and Restated 2007 Incentive Plan (Item B),
but is permitted to vote your shares in its discretion on the
ratification of the selection of the independent auditors
(Item C). Because the director nominees receiving the
highest number of votes will be elected, a broker non-vote is
the equivalent of a withheld vote in the election of
directors (Item A). Broker non-votes are not considered
present for purposes of voting on the approval of
the Amended and Restated 2007 Incentive Plan (Item B);
accordingly, broker non-votes will have no effect on the voting
results of the proposal. Because brokers have discretionary
authority to vote on the ratification of the selection of the
independent auditors (Item C), in the absence of voting
instructions, broker non-votes will have no effect on the voting
results.
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10.
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Is
my vote confidential?
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The Company maintains a policy of keeping stockholder votes
confidential.
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11.
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Can I,
in the future, receive my proxy statement and annual report over
the Internet?
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Stockholders can elect to view future Company proxy statements
and annual reports over the Internet instead of receiving paper
copies in the mail and thus can save the Company the cost of
producing and mailing these documents. Costs normally associated
with electronic access, such as usage and telephonic charges,
will be borne by you.
If you are a stockholder of record and you choose to
vote over the Internet, you can choose to receive future annual
reports and proxy statements electronically by following the
prompt on the voting page when you vote using the Internet. If
you hold your Company stock in street name (such as
through a broker, bank or other nominee account), check the
information provided by your nominee for instructions on how to
elect to view future proxy statements and annual reports over
the Internet.
Stockholders who choose to view future proxy statements and
annual reports over the Internet will receive instructions
electronically that contain the Internet address for those
materials, as well as voting instructions, approximately six
weeks before future meetings.
If you enroll to view the Companys future annual reports
and proxy statements electronically and vote over the Internet,
your enrollment will remain in effect for all future
stockholders meetings unless you cancel it. To cancel,
stockholders of record should access
www.bnymellon.com/shareowner/isd and follow the
instructions to cancel your enrollment. You should retain your
control number appearing on your enclosed proxy or voting
instruction card. If you hold your Company stock in street
name, check the information provided by your nominee
holder for instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the
annual report or proxy statement, please write to the Corporate
Secretary, Allegheny Technologies Incorporated, 1000 Six PPG
Place, Pittsburgh, Pennsylvania
15222-5479.
3
ATI
CORPORATE GOVERNANCE AT A GLANCE
This list provides some highlights from the Allegheny
Technologies corporate governance program. You can find
details about these and other corporate governance policies and
practices in the following pages of the Proxy Statement and in
the Our Corporate Governance section of the
About Us page of our web site at
www.atimetals.com.
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Under our Corporate Governance Guidelines, at least 75% of our
directors must be independent. Currently, approximately 90% of
our directors are independent; Mr. Hassey is the only ATI
officer on the Board and is the only non-independent, management
director.
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Independent directors meet in regularly scheduled executive
sessions without management.
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Stockholders can communicate with the independent directors.
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All of the standing committees of the Board of Directors are
composed entirely of independent directors.
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All standing committees have a written charter that is reviewed
and reassessed annually and is posted on our web site.
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Our Corporate Governance Guidelines have been adopted and are
disclosed on our web site.
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We have an annual self-evaluation process for the Board and each
standing committee.
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Our Board evaluates individual directors whose terms are nearing
expiration but who may be proposed for re-election.
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Our Nominating and Governance Committee will consider director
candidates recommended by stockholders. Stockholder-recommended
candidates will be evaluated on the same basis as other
candidates.
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The Chair of the Audit Committee has been designated as an
audit committee financial expert.
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Stockholders annually ratify the Audit Committees
selection of independent auditors.
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Our internal audit function reports directly to the Audit
Committee.
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Our Corporate Guidelines for Business Conduct and Ethics
for directors, officers, and employees are disclosed on our
web site.
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We have stock ownership guidelines for officers and for
directors.
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We provide confidential stockholder voting.
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Corporate governance and corporate responsibility are part of
our sustainability policies and practices, and are discussed
under the Sustainability section of our web site.
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4
OUR
CORPORATE GOVERNANCE
Corporate
Governance Guidelines
ATIs Board of Directors has adopted Corporate Governance
Guidelines, which are designed to assist the Board in the
exercise of its duties and responsibilities to the Company. They
reflect the Boards commitment to monitor the effectiveness
of decision making at the Board and management level, with a
view of achieving ATIs strategic objectives. They are
subject to modification by the Board from time to time. You can
find the Companys Corporate Governance Guidelines on our
web site at www.atimetals.com, by first clicking
About Us and then Our Corporate
Governance.
Number
and Independence of Directors
The Board of Directors determines the number of directors. The
Board currently consists of nine members: L. Patrick Hassey
(Chairman), Diane C. Creel, James C. Diggs, J. Brett Harvey,
Barbara S. Jeremiah, Michael J. Joyce, James E. Rohr, Louis J.
Thomas and John D. Turner.
In accordance with the Corporate Governance Guidelines, at least
75% of the Companys directors are, and at least a
substantial majority of its directors will be,
independent under the guidelines set forth in the
listing standards of the New York Stock Exchange
(NYSE) and the Companys categorical Board
independence standards, which are set forth in the Corporate
Governance Guidelines. A director is independent
only if the director is a non-management director and, in the
Boards judgment, does not have a material relationship
with the Company or its management.
The Board considers L. Patrick Hassey, the current Chairman,
President and Chief Executive Officer of the Company, to not be
an independent director.
The Board, at its February 25, 2010 meeting, affirmatively
determined that the remaining eight of the Companys
current directors, Diane C. Creel, James C. Diggs, J. Brett
Harvey, Barbara S. Jeremiah, Michael J. Joyce, James E. Rohr,
Louis J. Thomas and John D. Turner, are independent in
accordance with the foregoing standards. Seven of the
Companys directors have no relationships with the Company
other than as directors and stockholders of the Company. One of
the Companys directors, James E. Rohr, is Chairman and
Chief Executive Officer of The PNC Financial Services Group,
Inc. (PNC). The Company has a $400 million
unsecured revolving credit facility with a syndicate of 13
financial institutions, including PNC Bank, National
Association, a subsidiary of PNC, as lender and administrative
agent. PNC Capital Markets LLC, an affiliate of PNC, served as
lead arranger with respect to this facility. The Company pays
fees to PNC Bank under the terms of this facility. The Company
also invests in three money market funds managed by BlackRock,
Inc. (BlackRock). PNC currently holds approximately
34% of the outstanding common stock of BlackRock, and BlackRock
beneficially owns approximately 5.1% of the Companys
Common Stock. During 2009, the Company paid fees to PNC and its
affiliates representing a de minimis portion of both the
Companys revenues and PNCs revenues, and therefore,
all amounts were substantially less than the thresholds set
forth in the NYSEs listing standards which disqualify a
director from being independent. Mr. Rohrs
compensation is not affected by the fees that the Company pays
to PNC. The Board has determined that (A) the transactions
between the Company and PNC (i) are commercial transactions
carried out at arms length in the ordinary course of
business, (ii) are not material to PNC or to Mr. Rohr,
(iii) do not and would not potentially influence
Mr. Rohrs objectivity as a member of the
Companys Board of Directors in a manner that would have a
meaningful impact on his ability to satisfy requisite fiduciary
standards on behalf of the Company and its stockholders, and
(iv) do not preclude a determination that
Mr. Rohrs relationship with the Company in his
capacity as Chairman and Chief Executive Officer of PNC is
immaterial, and (B) Mr. Rohr is an independent
director under NYSE existing guidelines and the Companys
categorical Board independence standards.
Audit Committee members must meet additional independence
standards under NYSE listing standards and rules of the
Securities and Exchange Commission (SEC);
specifically, Audit Committee members may not receive any
compensation from the Company other than their directors
compensation. The Board has also determined that each member of
the Audit Committee satisfies the enhanced standards
5
of independence applicable to Audit Committee members under NYSE
listing standards and the rules of the SEC.
Board
Leadership
Under the Companys Certificate of Incorporation, Amended
and Restated Bylaws and Corporate Governance Guidelines, the
Board of Directors has the flexibility to determine whether it
is in the best interests of the Company and its stockholders to
separate or combine the roles of Chairman and Chief Executive
Officer of the Company at any given time. Whenever a Chairman
and/or Chief
Executive Officer is appointed, the Board of Directors assesses
whether the roles should be separated or combined based upon its
evaluation of, among other things, the existing composition of
the Board of Directors and the circumstances at the time. While
it retains the discretion to separate the roles in the future as
it deems appropriate and acknowledges that there is no single
best organizational model that is most effective in all
circumstances, our Board of Directors currently believes that
the Company and its stockholders are best served by having
Mr. Hassey hold both of these positions concurrently.
The Board of Directors believes that having Mr. Hassey
serve both as Chairman and Chief Executive Officer promotes
unified leadership and direction for the Company, which more
efficiently allows for a single, clear focus on the
implementation of the Companys strategy and business plans
to maximize stockholder value. This leadership structure has
resulted in the growth and financial success of the Company
since Mr. Hassey began to serve in both capacities in May
2004. In addition, the Board of Directors believes that
Mr. Hassey, serving in his respective capacities as
Chairman and Chief Executive Officer, has served as an effective
bridge between the Board of Directors and the Companys
management.
The Board of Directors has taken a number of measures related to
corporate governance in order to provide what it views as an
appropriate balance between the respective needs for dependable
strategic leadership by Mr. Hassey as the Companys
Chairman and Chief Executive Officer and the oversight and
objectivity of independent directors, including the following:
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There is only one management representative on the
Companys nine-member Board of Directors. Directors who
have been determined by the Board of Directors to be independent
in accordance with NYSE rules comprise approximately 90% of the
Board of Directors, significantly above the majority standard
mandated by the NYSE.
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All members of each of the Audit Committee, the Finance
Committee, the Nominating and Governance Committee, the
Personnel and Compensation Committee and the Technology
Committee of the Board of Directors are independent directors.
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The independent, non-management directors meet separately in
regularly scheduled executive sessions without members of
management, except to the extent that the independent,
non-management directors request the attendance of a particular
member of management. Further, any director may request that the
independent, non-management directors go into executive session
at any meeting. Rather than designating a lead independent
director, the Board of Directors has determined that meetings of
independent, non-management directors in executive session are
to be chaired on a rotating, per meeting basis among the
non-management chairs of the committees of the Board of
Directors so that the Company may benefit from having different
independent directors serve in that function from time to time.
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All independent directors are free to suggest the inclusion of
items on the agenda for any meeting of the Board of Directors or
raise subjects that are not on the agenda for that meeting.
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The Board of Directors and each of its committees has complete
and open access to any member of management and the authority to
retain independent legal, financial and other advisors as they
deem appropriate without consulting or obtaining the approval of
any member of management.
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6
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The Personnel and Compensation Committee, which is composed
entirely of independent directors, is responsible for evaluating
the performance of the Chief Executive Officer and other senior
executives.
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The Nominating and Governance Committee, which is composed
entirely of independent directors, is responsible for evaluating
the overall performance of the Board of Directors. In addition,
the Nominating and Governance Committee considers director
candidates recommended by stockholders on the same basis as
other candidates.
|
Boards
Role in Risk Oversight
The Board of Directors as a whole actively oversees the risk
management of the Company. Enterprise risks the
specific financial, operational, business and strategic risks
that the Company faces, whether internal or external
are identified and prioritized by the Board and management
together, and then each specific risk is assigned to the full
Board or a Board committee for oversight. Certain strategic and
business risks, such as those relating to our products, markets
and capital investments, are overseen by the entire Board. The
Audit Committee and Finance Committee oversee management of
market and operational risks that could have a financial impact,
such as those relating to internal controls, liquidity or raw
material availability. The Nominating and Governance Committee
manages the risks associated with governance issues, such as the
independence of the Board, and the Personnel and Compensation
Committee is responsible for managing the risks relating to the
Companys executive compensation plans and policies and, in
conjunction with the Board, key executive succession.
Management regularly reports to the Board or relevant Committee
on actions that the Company is taking to manage these risks. The
Board and management periodically review, evaluate and assess
the risks relevant to the Company.
Director
Terms
The directors are divided into three classes and the directors
in each class generally serve for a three-year term unless the
director is unable to serve due to death, retirement or
disability. The term of one class of directors expires each year
at the annual meeting of stockholders. The Board may fill a
vacancy by electing a new director to the same class as the
director being replaced. The Board may also create a new
director position in any class and elect a director to hold the
newly created position. It is expected that new directors
appointed to the Board will stand for election by the
stockholders at the next annual meeting.
Committees
of the Board of Directors
The Board of Directors has the following five standing
committees: Audit Committee, Finance Committee, Nominating and
Governance Committee, Personnel and Compensation Committee, and
Technology Committee.
Only independent directors, as independence is determined by
NYSE rules, are permitted to serve on the Audit Committee, the
Nominating and Governance Committee, and the Personnel and
Compensation Committee. All of the standing committees of the
Board of Directors are comprised of independent directors.
Each committee has a written charter that describes its
responsibilities. Each of the Audit Committee, the Nominating
and Governance Committee and the Personnel and Compensation
Committee has the authority, as it deems appropriate, to
independently engage outside legal, accounting or other advisors
or consultants. In addition, each committee annually conducts a
review and evaluation of its performance and reviews and
reassesses its charter. You can find the current charters of
each committee on our web site at www.atimetals.com by
first clicking About Us, then clicking Our
Corporate Governance and then clicking Committee
Charters.
7
Audit
Committee
The current members of the Audit Committee are Michael J. Joyce
(Chair), James C. Diggs, Barbara S. Jeremiah, Louis J. Thomas
and John D. Turner. The Board of Directors has determined that
these committee members have no financial or personal ties to
the Company (other than director compensation and equity
ownership as described in this Proxy Statement) and that they
meet the NYSE and SEC standards for independence. The Board of
Directors has also determined that Michael J. Joyce meets the
SEC criteria to be deemed an audit committee financial
expert and meets the NYSE standard of having accounting or
related financial management expertise. Mr. Joyce has over
35 years of accounting, auditing and consulting experience,
having most recently served as New England Managing Partner of
Deloitte & Touche USA LLP prior to his retirement in
May 2004.
The Audit Committee assists the Board in its oversight of the
integrity of the Companys financial statements, compliance
with legal and regulatory requirements, the qualifications and
independence of the Companys independent auditors, and the
performance of the Companys internal audit function and
independent auditors. The Committee has the authority and
responsibility for the appointment, retention, compensation and
oversight of ATIs independent auditors, including
pre-approval of all audit and non-audit services to be performed
by the independent auditors. The independent auditors and the
internal auditors have full access to the Committee and meet
with the Committee with, and on a routine basis without,
management being present.
The Audit Committee is also responsible for reviewing, approving
and ratifying any related party transaction. For more
information, see the Certain Transactions section of
this Proxy Statement.
The Audit Committee Report appears on page 31 of this Proxy
Statement.
Finance
Committee
The Finance Committee makes recommendations and provides
guidance to the Board regarding major financial policies of the
Company. It also serves as named fiduciary of the employee
benefit plans maintained by the Company.
Nominating and
Governance Committee
The Nominating and Governance Committee is responsible for
overseeing corporate governance matters. It oversees the annual
evaluation of the Companys Board and its committees. It
also recommends to the Board individuals to be nominated as
directors, which process includes evaluation of new candidates
as well as an individual evaluation of current directors who are
being considered for re-election. In addition, this Committee is
responsible for administering ATIs director compensation
program. The Committee also performs other duties as are
described in the Corporate Governance Guidelines and in the
Committees charter.
Personnel and
Compensation Committee
The Personnel and Compensation Committee, on behalf of the Board
of Directors, establishes and annually reassesses the executive
compensation program and the Companys philosophy on
executive compensation, which is more fully discussed in the
Executive Compensation Compensation Discussion
and Analysis section of this Proxy Statement.
One of the duties of the Personnel and Compensation Committee is
to oversee Chief Executive Officer (CEO) and other
executive officer compensation. The Committee reviews and
approves corporate goals and objectives relevant to CEO and
other executive officer compensation, evaluates the CEOs
performance in light of those goals and objectives, and
determines and approves the CEOs compensation level
(either as a Committee or together with the other independent
directors, as directed by the Board) based on this evaluation.
The Committee also reviews and approves non-CEO executive
officer compensation, and makes recommendations to the Board
with respect to incentive compensation plans and equity-based
plans that require Board approval. In addition, the Personnel
and Compensation Committee administers ATIs incentive
compensation plans. For other executives, the Committee reviews
and approves recommendations from management within plan
parameters.
8
However, the Committee may not delegate any authority under
those plans for matters affecting the compensation and benefits
of the executive officers.
The Personnel and Compensation Committee, under the terms of its
charter, has the sole authority to retain, approve fees and
other terms for, and terminate any compensation consultant used
to assist the committee in the evaluation of the Chief Executive
Officer or other executive compensation. The Committee may also
obtain advice and assistance from internal or external legal,
accounting or other advisors. Each year, the Committee retains a
compensation consultant; for years 2009, 2008 and 2007, the
Committee retained Mercer (US), Inc. (Mercer), an
outside compensation and executive benefits consulting firm. In
making its determination to retain Mercer, the Committee
reviewed Mercers qualifications, including independence,
and has assured itself of Mercers independence on an
ongoing basis. Mercer was retained to assist the Committee to
review market conditions and peer company practices and to
benchmark the Companys executive compensation programs
against those parameters. Mercer performed market analyses of
peer group companies and the general market for executive
talent, and made recommendations to the Committee as to the form
of and incentive opportunities for executive compensation. The
Committee has also retained external legal advisors. Please see
the information under the Compensation Consultant
caption of the Executive Compensation
Compensation Discussion and Analysis section of this Proxy
Statement for more discussion about the role of the compensation
consultant.
Mercer and the Companys legal advisors periodically attend
meetings of the Committee. For portions of those meetings, the
Chief Executive Officer and the Executive Vice President, Human
Resources, Chief Legal and Compliance Officer, General Counsel
and Corporate Secretary also attend and are given the
opportunity to express their views on executive compensation to
the Committee. Please see the Executive
Compensation Compensation Discussion and
Analysis section of this Proxy Statement for more
discussion about executive officer compensation.
Each member of the Personnel and Compensation Committee is a
non-employee director of the Company as defined
under
Rule 16b-3
of the Securities Exchange Act of 1934, and each member is also
an outside director for the purposes of the
corporate compensation provisions contained in
Section 162(m) of the Internal Revenue Code.
The Compensation Committee Report appears on page 47 of
this Proxy Statement.
Technology
Committee
The Technology Committee reviews changing technologies and
evaluates how they affect the Company and its technical
capabilities.
Board
and Committee Membership Director Attendance at
Meetings
During 2009, the Board of Directors held nine meetings. In 2009,
all directors attended at least 75% of the total Board meetings
and meetings of Board committees of which they were members, and
average attendance at Board and committee meetings was
approximately 97%.
The independent, non-management directors meet separately in
regularly scheduled executive sessions without members of
management (except to the extent that the non-management
directors request the attendance of a member of management).
When, as is currently the case, the Chairman of the Board is a
management director, or if the Chairman would otherwise so
choose, the position of Chair of the meetings of the
non-management directors rotates on a per meeting basis in the
order specified in the Corporate Governance Guidelines among the
non-management Chairs of the Boards committees. If not a
member of management, the Chairman of the Board would serve as
Chair of these meetings.
A Board meeting is typically scheduled in conjunction with our
annual meeting of stockholders and it is expected that our
directors will attend absent good reason, such as a scheduling
conflict. In 2009, all directors attended our annual meeting of
stockholders.
9
The table below provides information with respect to current
Board committee memberships. The table also sets forth the
number of meetings held by each Board committee in 2009.
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Nominating
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Personnel
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and
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and
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Director
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Audit
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Finance
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Governance
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Compensation
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Technology
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D. C. Creel
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X
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X
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*
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X
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J. C. Diggs
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X
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X
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*
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X
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J. B. Harvey
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X
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X
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L. P. Hassey
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B. S. Jeremiah
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X
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X
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M. J. Joyce
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X
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*
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X
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J. E. Rohr
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X
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*
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L. J. Thomas
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X
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X
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J. D. Turner
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X
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X
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X
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*
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Number of Meetings held in 2009
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14
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7
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5
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4
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4
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*
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Denotes Committee Chair.
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Director
Compensation
Effective January 1, 2007 and as amended August 1,
2008, the non-employee director compensation program consists
of: an annual retainer fee comprised of a cash payment of
$60,000 and restricted stock valued at $100,000; Committee
chairperson cash retainer fee of a $10,000; $2,500 per day fee
for attending Board meetings; and $1,500 for each committee
meeting attended.
The Company also pays for ATI orientation or training of Board
members outside of Board and committee meetings and for the
directors travel, lodging, meal and other expenses
connected with their Board service.
The non-employee directors of the Board earned the following in
2009:
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Change in
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Pension Value
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and Non-
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Fees
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Qualified
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Earned Or
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Non-Equity
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Deferred
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Paid
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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In Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name(1)
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($)(2)
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($)(3)
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($)
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($)
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($)
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($)(4)
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($)
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D. C. Creel
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137,500
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100,005
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3,016
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240,521
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J. C. Diggs
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142,000
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100,005
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3,016
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245,021
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J. B. Harvey
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108,500
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100,005
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2,568
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211,073
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B. S. Jeremiah
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120,500
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100,005
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2,115
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222,620
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M. J. Joyce
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143,500
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100,005
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3,016
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246,521
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J. E. Rohr
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103,500
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100,005
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3,016
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206,521
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L. J. Thomas
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124,500
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100,005
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3,016
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227,521
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J. D. Turner
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143,500
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100,005
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3,016
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246,521
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(1) |
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L. Patrick Hassey, President and
Chief Executive Officer of the Company, is Chairman of the Board
of Directors and does not receive any compensation for his
service on the Board of Directors. All compensation paid to
Mr. Hassey by the Company for his service as an executive
officer is reflected under Summary Compensation Table for
2009.
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(2) |
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This column reflects the annual
retainer fee, committee chair fees, and Board and committee
meeting fees paid to each director.
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10
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(3) |
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This column reflects the aggregate
grant date fair value, determined in accordance with FASB ASC
Topic 718, of the restricted stock awards granted to directors
under the Companys Non-Employee Director Restricted Stock
Program. Shares vest on the third anniversary of the date of
grant, or earlier upon retirement, death or change of control,
and expense is recognized over the vesting period. A discussion
of the relevant assumptions made in the valuations may be found
in Note 11 to the financial statements in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
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(4) |
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This column reflects the cash
dividends paid on directors restricted stock. As
previously announced in April 2009, for future grants of
restricted stock to non-employee directors, during the
restriction period, directors will not be entitled to receive
dividends paid on the restricted shares until the restrictions
lapse.
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The Board encourages directors to obtain a meaningful stock
ownership interest in the Company. Non-employee directors should
own shares of Company Common Stock having a market value of at
least three times the annual retainer amount within a reasonable
time after December 31, 2009.
In December 2004, the Board froze and discontinued the
Companys Fee Continuation Plan for Non-Employee Directors.
Under the frozen plan, an amount equal to the annual retainer
fee in effect for 2004, which was $28,000, will be paid annually
to the members of the Board as of December 31, 2004,
following the termination of the directors service as a
Board member, for each year of the directors credited
service as a director (as defined in the Plan) up to a maximum
of ten years.
11
Corporate
Guidelines for Business Conduct and Ethics
ATI has a code of ethics, which we refer to as the Corporate
Guidelines for Business Conduct and Ethics (the
Guidelines), that applies to all directors, officers
and employees, including our principal executive officer, our
principal financial officer, and our controller and chief
accounting officer. ATI has had a code of conduct for many
years. We require all directors, officers and employees to
adhere to these Guidelines in addressing legal and ethical
issues encountered in their work. These Guidelines require that
our directors, officers and employees avoid conflicts of
interest, comply with all laws, conduct business in an honest
and ethical manner and otherwise act with integrity and honesty
in all of their actions by or on behalf of the Company. These
Guidelines include a financial code of ethics specifically for
our Chief Executive Officer, our Chief Financial Officer, and
all other financial officers and employees, which supplements
the general principles set forth in the Guidelines and is
intended to promote honest and ethical conduct, full and
accurate reporting, and compliance with laws as well as other
matters.
Employees are required to certify that they have reviewed and
understand the Guidelines. In addition, each year, all officers
and managers are required to certify as to their compliance with
the standards set forth in the Guidelines. Also, beginning in
2006, the Company implemented an online ethics training program,
administered by a third party. We require all directors,
officers and employees to take an interactive online ethics
course at least annually. In 2009, the courses addressed
antitrust matters, sexual harassment, and the Guidelines.
The Company encourages employees to communicate concerns before
they become problems. We believe that building and maintaining
trust, respect and communications between employees and
management and between fellow employees is critical to the
overriding goal of efficiently producing high quality products,
providing the maximum level of customer satisfaction, and
ultimately fueling profitability and growth. Only the Audit
Committee of the Board can amend or grant waivers from the
provisions of the Guidelines relating to the Companys
executive officers and directors, and any such amendments or
waivers will be promptly posted on our web site at
www.atimetals.com. To date, no such amendments have been
made or waivers granted.
A copy of the Corporate Guidelines for Business Conduct and
Ethics, which includes the financial code of ethics, is
available on our web site at www.atimetals.com by first
clicking About Us and then Our Ethics.
Identification
and Evaluation of Candidates for Director
The Board is responsible for recommending director nominees to
the stockholders and for selecting directors to fill vacancies
between stockholder meetings. The Nominating and Governance
Committee recommends candidates to the Board. The Nominating and
Governance Committee is comprised entirely of independent
directors under the applicable rules and regulations of the New
York Stock Exchange and Securities and Exchange Commission. The
Committee operates under a written charter adopted by the Board
of Directors. A copy of the Committees charter is
available at the Companys web site at
www.atimetals.com by first clicking About Us
and then Our Corporate Governance. Paper copies can
be obtained by writing to the Corporate Secretary, Allegheny
Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA
15222-5479.
The Committee considers director candidates suggested by members
of the Committee, other directors, senior management and
stockholders. For information on how to submit a candidate for
consideration, please see the caption 2011 Annual Meeting
and Stockholder Proposals below.
Preliminary interviews of director candidates may be conducted
by the Chair of the Nominating and Governance Committee or, at
her request, any other member of the Committee or the Chairman
of the Board. Background material pertaining to director
candidates is distributed to the Committee for review. Director
candidates who the Committee determines merit further
consideration are interviewed by the Chair of the Committee and
other Committee members, directors and key senior management.
The
12
results of these interviews are considered by the Nominating and
Governance Committee in its deliberations.
Though the Board does not have a formal policy regarding
diversity, it is one of many criteria considered by the Board
when evaluating candidates. Director candidates are generally
selected on the basis of the following criteria: their business
or professional experience, recognized achievement in their
respective fields, integrity and judgment, ability to devote
sufficient time to the affairs of the Company, the diversity of
their backgrounds and the skills and experience that their
membership adds to the overall competencies of the Board, and
the needs of the Company from time to time. Nominees must also
represent the interests of all stockholders. In accordance with
the retirement policy for directors set forth in the Corporate
Governance Guidelines, a person who is 72 years of age or
older cannot be nominated to serve on the Board. Our practice
has been that new directors added to the Board or to fill
vacancies stand for re-election at the next annual meeting of
stockholders.
In evaluating the needs of the Board, the Nominating and
Governance Committee considers the qualifications of sitting
directors and consults with other members of the Board
(including as part of the Boards annual self-evaluation),
the Chairman, President and Chief Executive Officer and other
members of executive management. At a minimum, all recommended
candidates must exemplify the highest standards of personal and
professional integrity, meet any required independence
standards, and be willing and able to constructively participate
in and contribute to Board and committee meetings. Additionally,
the Committee conducts individual reviews of current directors
whose terms are nearing expiration, but who may be proposed for
re-election, in light of the considerations described above and
their past contributions to the Board.
Process
for Communications with Directors
We maintain a process for stockholders and interested parties to
communicate with the Board of Directors or any individual
director. ATI stockholders or interested parties who want to
communicate with the Board or any individual director can write
to:
Allegheny Technologies Incorporated
Corporate Secretary
Board Administration
1000 Six PPG Place
Pittsburgh, PA
15222-5479
or call 1-877-787-9761 (toll free). Your letter or message
should indicate whether you are an ATI stockholder. Depending on
the subject matter, the Corporate Secretary will:
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forward the communication to the director or directors to whom
it is addressed;
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attempt to handle the inquiry directly when, for example, it is
a request for information about the Company or it is a
stock-related matter; or
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not forward the communication if it is primarily commercial in
nature or it relates to an improper or irrelevant topic.
|
At each Board meeting, the Corporate Secretary presents a
summary of all communications received since the last meeting
that were not forwarded and makes those communications available
to the directors on request.
13
2011
Annual Meeting and Stockholder Proposals
Under
Rule 14a-8
of the Securities Exchange Act of 1934, proposals of
stockholders intended to be presented at the 2011 Annual Meeting
of Stockholders must be received no later than December 3,
2010 for inclusion in the proxy statement and proxy card for
that meeting. In addition, the Companys certificate of
incorporation provides that in order for director nominations or
other business to be properly brought before an annual meeting
by a stockholder, the stockholder must give timely notice
thereof in writing to the Corporate Secretary. The notice must
contain certain information, including information about the
proposal and the interest, if any, of the stockholder who is
making the proposal, as well as the name, address and share
ownership of the stockholder giving notice.
Stockholders may nominate candidates for election to the Board
by following the procedures described in ATIs certificate
of incorporation. Stockholder-recommended candidates will be
evaluated on the same basis as other candidates. The provisions
of ATIs certificate of incorporation generally require
that written notice of a nomination be received by the Corporate
Secretary, who will forward the information to the Nominating
and Governance Committee of the Board of Directors for the
Committees consideration. The notice must contain certain
information about the nominee, including his or her age,
address, occupation and share ownership, as well as the name,
address and share ownership of the stockholder giving notice.
For all such notices to be timely, the provisions of the
Companys certificate of incorporation generally require
that notice be received by the Corporate Secretary not less than
75 days and not more than 90 days before the first
anniversary of the date of the preceding years annual
meeting. For our annual meeting in the year 2011, we must
receive this notice on or after February 6, 2011 and on or
before February 21, 2011.
Stockholders may obtain a copy of the full text of the
provisions of our certificate of incorporation by writing to the
Corporate Secretary, Allegheny Technologies Incorporated, 1000
Six PPG Place, Pittsburgh, PA
15222-5479.
A copy of our certificate of incorporation has been filed with
the Securities and Exchange Commission and can be viewed on our
web site at www.atimetals.com by first clicking
About Us and then Our Corporate
Governance.
The Company has adopted a procedure called
householding, which has been approved by the SEC.
Under this procedure, the Company will deliver only one copy of
its annual report and proxy statement to stockholders of record
who share the same address and last name unless the Company has
received contrary instructions from an affected stockholder.
This procedure reduces the Companys printing costs and
mailing costs and fees. Upon written or oral request, the
Company will promptly deliver a separate annual report and proxy
statement to any stockholder at a shared address to which a
single copy of either of those documents was delivered. If you
would like to receive a separate copy of the annual report or
proxy statement for this meeting or revoke your householding
consent, or if you are a stockholder eligible for householding
and would like to participate in householding, please send a
request addressed to the Corporate Secretary of the Company at
1000 Six PPG Place, Pittsburgh, PA
15222-5479,
or call
(412) 394-2800.
A number of brokerage firms have instituted householding. If you
hold your shares in street name, please contact your
bank, broker or other holder of record to request information
about householding.
14
Section 16(a)
Beneficial Ownership Reporting Compliance
The rules of the Securities and Exchange Commission (SEC)
require the Company to disclose late filings of reports of stock
ownership (and changes in stock ownership) by its directors and
statutory insiders and by persons who beneficially own more than
ten percent of a registered class of the Companys equity
securities. Based upon a review of filings with the SEC and
written representations, the Company believes that, in 2009, all
such persons complied with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934 on a
timely basis.
Five
Percent Owners of Common Stock
The individuals and entities listed in the following table are
beneficial owners of five percent or more of Company Common
Stock as of December 31, 2009, based on information filed
with the SEC. In general, beneficial ownership
includes those shares a person has the power to vote or
transfer, and options to acquire Common Stock that are
exercisable currently or within 60 days.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
Percent of
|
|
|
Name and Address of Beneficial
Owner
|
|
|
Beneficial Ownership
|
|
Class(4)
|
|
|
|
Capital Group International, Inc.
|
|
|
|
12,567,240
|
(1)
|
|
|
12.8
|
%
|
|
|
Capital Guardian Trust Company
11100 Santa Monica Boulevard
Los Angeles, CA 90025
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
|
|
|
|
5,033,766
|
(2)
|
|
|
5.1
|
%
|
|
|
40 East
52nd
Street
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
Riofisa Holding, S.L.
|
|
|
|
5,121,000
|
(3)
|
|
|
5.2
|
%
|
|
|
Arbea Campus Empresarial
Edificio 5
Carretera de Fuencarral a Alcobendas M 603
Km 3800 Alcobendas (Madrid)
Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on a Schedule 13G/A
filing under the Securities Exchange Act of 1934 made on
February 10, 2010 by Capital Group International, Inc.
(CGII) and Capital Guardian Trust Company
(CGTC), CGII had sole voting power with respect to
an aggregate of 10,750,540 shares and sole dispositive
power with respect to an aggregate of 12,567,240 shares at
December 31, 2009. CGTC had sole voting power with respect
to an aggregate of 6,273,610 shares and sole dispositive
power with respect to an aggregate of 7,522,620 shares at
December 31, 2009. CGII and CGTC disclaim beneficial
ownership of 12,567,240 shares and 7,522,620 shares,
respectively.
|
|
(2) |
|
Based on a Schedule 13G filing
under the Securities Exchange Act of 1934 made on
February 2, 2010 by BlackRock Inc., which had sole voting
and sole dispositive power with respect to 5,033,766 shares
at December 31, 2009.
|
|
(3) |
|
Based on a Schedule 13G filing
under the Securities Act of 1934 made on June 9, 2008 by
Riofisa Holding, S.L, which had sole voting and sole dispositive
power with respect to an aggregate of 5,121,000 shares at
May 30, 2008.
|
|
(4) |
|
As of December 31, 2009, there
were 98,070,474 shares of Company Common Stock outstanding.
|
15
Stock
Ownership of Management
The following table sets forth the shares of Common Stock
reported to the Company as beneficially owned as of
March 1, 2010 by the nominees for director, the continuing
directors, each officer named in the Summary Compensation Table
(named officers) and all directors, nominees, named
officers and other statutory insiders as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
Percent of
|
|
|
Beneficial Owner
|
|
Beneficial
Ownership(1)
|
|
Class(2)
|
|
|
|
Diane C. Creel
|
|
|
18,409
|
|
|
|
*
|
|
|
|
|
|
Lynn D. Davis
|
|
|
58,657
|
|
|
|
*
|
|
|
|
|
|
James C. Diggs
|
|
|
7,249
|
|
|
|
*
|
|
|
|
|
|
Terry L. Dunlap
|
|
|
91,210
|
|
|
|
*
|
|
|
|
|
|
Richard J. Harshman
|
|
|
184,396
|
|
|
|
*
|
|
|
|
|
|
J. Brett Harvey
|
|
|
7,711
|
|
|
|
*
|
|
|
|
|
|
L. Patrick Hassey
|
|
|
610,463
|
|
|
|
*
|
|
|
|
|
|
Barbara S. Jeremiah
|
|
|
8,592
|
|
|
|
*
|
|
|
|
|
|
Michael J. Joyce
|
|
|
9,178
|
|
|
|
*
|
|
|
|
|
|
James E. Rohr
|
|
|
22,035
|
|
|
|
*
|
|
|
|
|
|
Louis J. Thomas
|
|
|
8,985
|
|
|
|
*
|
|
|
|
|
|
John D. Turner
|
|
|
15,146
|
|
|
|
*
|
|
|
|
|
|
Jon D. Walton
|
|
|
185,771
|
|
|
|
*
|
|
|
|
|
|
|
All directors, nominees, named officers and other statutory
insiders as a group (14)
|
|
|
1,283,229
|
|
|
|
1.31
|
%
|
|
|
|
|
|
|
|
*
|
Indicates beneficial ownership of
less than one percent (1%) of the outstanding shares of Company
Common Stock.
|
|
|
|
(1) |
|
The table includes shares of
restricted stock (with respect to directors) and
performance/restricted stock under the Performance/Restricted
Stock Program and/or restricted stock under the Performance
Equity Payment Program (with respect to named officers and
statutory insiders) in the following amounts: each of
Ms. Creel and Messrs. Diggs, Joyce, Rohr, Thomas and
Turner, 4,844; Mr. Harvey, 4,221; Ms. Jeremiah, 3,592;
Mr. Hassey, 165,226; Mr. Harshman, 52,122;
Mr. Walton, 47,384; Mr. Dunlap, 40,564, and
Mr. Davis, 36,052; and all directors, nominees, named
officers and other statutory insiders as a group, 401,739. The
table includes shares held in the Companys 401(k) plans
for the accounts of Mr. Walton and other members of the
group and shares held jointly with the named individuals
spouses.
|
|
|
|
The table also includes the
following shares where beneficial ownership is disclaimed:
47,257 shares owned by Mr. Hasseys spouse;
25,687 shares owned by Mr. Harshmans spouse;
45,599 shares owned by Mr. Waltons spouse; and
277 shares held by the spouses of other statutory insiders.
|
|
|
|
The table includes shares issuable
pursuant to options that are currently exercisable or may become
exercisable on or before April 30, 2010 in the following
amounts: Mr. Harshman, 15,000; Mr. Joyce, 1,000;
Mr. Rohr, 7,000; Mr. Thomas, 2,000; Mr. Turner,
3,000; Mr. Walton, 15,000; and for all directors, nominees,
named officers and other statutory insiders as a group, 43,000.
|
|
(2) |
|
The percentages in the column were
calculated based on 98,070,474 outstanding shares of Company
Common Stock at December 31, 2009. As of March 1,
2010, there were 98,537,807 shares of Company Common Stock
outstanding.
|
16
PROPOSALS REQUIRING
YOUR VOTE
Election
of Directors Item A on Proxy
Card
The Board of Directors has nominated for election three
incumbent directors. L. Patrick Hassey, Barbara S. Jeremiah and
John D. Turner are Class II directors standing for
re-election to the Board for a three-year term expiring in 2013.
The three nominees who receive the highest number of votes cast
will be elected. If you sign and return your proxy card, the
individuals named as proxies on the card will vote your shares
FOR the election of the three nominees named below unless you
provide other instructions. You may withhold authority for the
proxies to vote your shares on any or all of the nominees by
following the instructions on your proxy card. If a nominee
becomes unable to serve, the proxies will vote for a
Board-designated substitute or the Board may reduce the number
of directors. The Company has no reason to believe that any of
the three nominees for election named below will be unable to
serve.
The Board of Directors determined that each of the nominees
qualifies for re-election under the criteria for evaluation of
directors described under Identification and Evaluation of
Candidates for Director on page 12 of this Proxy
Statement. The Board of Directors determined that
Ms. Jeremiah and Mr. Turner qualify as independent
directors under applicable rules and regulations and the
Companys categorical Board independence standards. See
Identification and Evaluation of Candidates for
Director at page 12 of this Proxy Statement and
Number and Independence of Directors at page 5
of this Proxy Statement.
All of our directors bring to our Board a wealth of leadership
experience derived from their service in executive and
managerial roles and also extensive board experience. Background
information about the nominees and the continuing directors,
including their business experience and directorships during the
past five years, and certain individual qualifications and
skills of our directors that contribute to the Boards
effectiveness as a whole, are described in the following
paragraphs.
THE BOARD OF
DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE ELECTION OF THE THREE NOMINEES
LISTED ON THE NEXT PAGE.
17
Nominees
Term to Expire at the 2013 Annual Meeting
(Class II)
L. Patrick Hassey
Age 64
Chairman, President and Chief Executive Officer
Mr. Hassey has been President and Chief Executive Officer
since October 1, 2003. He was elected to the Companys
Board of Directors in July 2003 and has served as Chairman since
May 2004. Prior to this position, Mr. Hassey worked as an
outside management consultant to Allegheny Technologies
management team. Mr. Hassey was Executive Vice President
and a member of the corporate executive committee at Alcoa Inc.
at the time of his early retirement in February 2003. He had
served as Executive Vice President of Alcoa and Group President
of Alcoa Industrial Components from May 2000 to October 2002.
Prior to May 2000, he served as a Vice President of Alcoa and
President of Alcoa Europe Inc.
Mr. Hassey was elected to the Board of Directors in 2003.
The Board believes that Mr. Hasseys qualifications
include, among other things, his leadership and extensive
experience in the metals industry and aerospace market, and that
his current position as the Companys Chief Executive
Officer provide him with intimate knowledge of our operations
and, as described in the Board Leadership section of
this Proxy Statement, provide unified vision for the Company.
Mr. Hassey also serves on the Board of Directors of Ryder
System, Inc. (since 2005).
Barbara S. Jeremiah
Age 58
Prior to her retirement in January 2009, Ms. Jeremiah
served as Executive Vice President of Alcoa, Inc., a leading
aluminum producer, from July 2002 until July 2008, when she also
assumed the position of Chairmans Counsel.
Ms. Jeremiah was elected to the Board in 2008 and currently
serves on the Audit and Technology Committees. The Board
believes that Ms. Jeremiahs qualifications include,
among other things, her strong background in the metals industry
and significant strategic development and international
experience.
Ms. Jeremiah also serves on the Board of Directors of EQT
Corporation, formerly Equitable Resources Inc. (since 2003).
John D. Turner
Age 64
Mr. Turner served as Chairman and Chief Executive Officer
of Copperweld Corporation, a manufacturer of tubular and
bimetallic wire products, from December 2001 until his
retirement in March 2003.
Mr. Turner joined the Board in 2004 and currently serves as
the Chair of the Technology Committee and also as a member of
the Audit and Finance Committees. The Board believes that
Mr. Turners qualifications include, among other
things, his experience in executive oversight and senior
leadership positions, background in the manufacturing sector,
and familiarity with industrial and technical matters.
Mr. Turner has served on the Board of Directors of Matthews
International Corporation since 1999 and as its Chairman since
February 2010. He also served on the Board of Directors of
Duquesne Light Holdings Inc. until 2007.
18
Continuing
Directors Term to Expire at the 2011 Annual Meeting
(Class III)
James C. Diggs
Age 61
Mr. Diggs is Senior Vice President and General Counsel of
PPG Industries, Inc., a producer of coatings, glass and
chemicals, since 1997. He held the position of Secretary from
September 2004 to September 2009.
Mr. Diggs has been serving on the Board since 2001 and is
Chair of the Finance Committee and also serves on the Audit and
Nominating and Governance Committees. The Board believes that
Mr. Diggss qualifications include, among other
things, his experience with industry and legal matters, his
senior leadership at a global public company, and his experience
with domestic and international operations.
J. Brett Harvey
Age 59
Mr. Harvey has been President and Chief Executive Officer
of CONSOL Energy Inc. since 1998. Prior to 1998, he was
President and Chief Executive Officer of PacifiCorp Energy Inc.
and had served in several other management positions at
PacifiCorp.
Mr. Harvey was elected to our Board of Directors in 2007
and currently serves on the Nominating and Governance Committee
and the Personnel and Compensation Committee. The Board believes
that Mr. Harveys qualifications include, among other
things, his significant oversight experience through years of
serving as a chief executive officer of a public company, his
industry experience and expertise in the oil and gas market (a
large end market for ATI), as well as his operational expertise.
Mr. Harvey has also been Chairman and Chief Executive
Officer of CNX Gas Corporation, a subsidiary of CONSOL Energy,
Inc., since 2009, and has served on the Board of Directors of
CNX Gas Corporation since 2005. In addition, Mr. Harvey has
served on the Boards of Directors of CONSOL Energy Inc., since
1998, and Barrick Gold Corporation, since 2005.
Michael J. Joyce
Age 68
Mr. Joyce served as New England Managing Partner of
Deloitte and Touche USA LLP, a public accounting firm, prior to
his retirement in May 2004.
Mr. Joyce joined the Board in 2004 and is Chair of the
Audit Committee and a member of the Finance Committee. The Board
believes that Mr. Joyces qualifications include,
among other things, his extensive knowledge of public accounting
and financial matters for complex global organizations.
Mr. Joyce has served on the Boards of Directors of A.C.
Moore Arts & Crafts, Inc. since 2004 and as its
Chairman since June 2006, and Brandywine Realty Trust since
2004. He also served on the Board of Directors of Heritage
Property Investment Trust, Inc. until 2006.
19
Continuing
Directors Term to Expire at the 2012 Annual Meeting
(Class I)
Diane C. Creel
Age 61
Prior to her retirement in September 2008, Ms. Creel served
as Chairman, Chief Executive Officer and President of Ecovation,
Inc., a subsidiary of Ecolab Inc. and a waste stream technology
company using patented technologies, since May 2003. Ecovation,
Inc. became a subsidiary of Ecolab Inc. in February 2008.
Previously, Ms. Creel served as Chief Executive Officer and
President of Earth Tech, an international consulting engineering
firm, from 1992 to May 2003.
Ms. Creel has served on the ATI Board of Directors since
1996, and is Chair of the Nominating and Governance Committee
and a member of each of the Finance Committee and Personnel and
Compensation Committee. The Board believes that
Ms. Creels qualifications include, among other
things, her experience as a chief executive officer of various
companies and her entrepreneurial, management and technical
experience.
Ms. Creel is also a member of the Boards of Directors of
Goodrich Corporation (since 1997) and Enpro Industries,
Inc. (since 2009). Recently, she has also served on the Boards
of Directors of Foster Wheeler Ltd., until 2008, American Funds
of Capital Research Management, until 2007, and Teledyne
Technologies Inc., until 2005.
James E. Rohr
Age 61
Mr. Rohr is Chairman and Chief Executive Officer of The PNC
Financial Service Group, Inc., a diversified financial services
organization. He served as President of The PNC Financial
Services Group from 1992 to 2002 and assumed the position of
Chief Executive Officer in 2000. He was named Chairman in 2001.
Mr. Rohr has served on the Board of Directors since 1996
and is Chair of the Personnel and Compensation Committee. The
Board believes that Mr. Rohrs qualifications include,
among other things, his significant leadership and management
experience from his years of serving as a chief executive
officer of a large, publicly-traded company, and his expertise
in capital markets and financial matters.
He has served on the Boards of Directors of The PNC Financial
Services Group, Inc. since 1990, BlackRock Inc. (of which The
PNC Financial Services Group, Inc. holds approximately a 34%
interest) since 1999, and EQT Corporation, formerly Equitable
Resources, Inc., since 1996.
Louis J. Thomas
Age 67
Mr. Thomas served as Director, District 4, United
Steelworkers of America for the Northeastern United States
and Puerto Rico prior to his retirement in May 2004.
Mr. Thomas was elected to the Board in 2004 and is a member
of the Audit and Technology Committees. The United Steelworkers
(USW) initially proposed the nomination of
Mr. Thomas in connection with the 2004 labor negotiations
with Allegheny Ludlum Corporation, a Company subsidiary. At that
time, the Company agreed that the International President of the
USW may propose a nominee for election as a director of the
Company to the Companys Chairman, President and Chief
Executive Officer. The USW nominee is to be a prominent
individual with experience in public service, labor, education
or business who meets the antitrust and conflicts of interest
screening required of all Company directors. Upon recommendation
by the Nominating and Governance Committee and election to the
Board, the USW nominee is expected to serve as a director during
the term of the labor agreement. The Board believes that
Mr. Thomass qualifications include, among other
things, his broad experience with labor relations and the
industrial and technical matters affecting our business.
Mr. Thomas served on the Board of Directors of Great Lakes
Bancorp Inc., the holding company for Greater Buffalo Savings
Bank, until 2006.
20
Amended
and Restated 2007 Incentive Plan Item B on
Proxy Card
Introduction
The Company proposes to amend and restate the 2007 Incentive
Plan to increase the number of shares authorized for issuance
thereunder from a total of 2.5 million to 4.5 million.
The following is a summary of the 2007 Incentive Plan, as
amended and restated (the Plan). A summary of the
key provisions of the Plan is set forth below and qualified by
reference to the complete text of the Plan, which is set forth
in Appendix A to this Proxy Statement
Since the 2007 Incentive Plan was initially adopted in 2007, the
Companys stock price has declined significantly due to the
global economic downturn. As a result, the Company has used more
shares under the plan than originally anticipated to compensate
and retain the Companys employees who participate in the
Companys long-term incentive compensation programs.
Plan
Highlights
The Plan authorizes independent members of the Board of
Directors or an authorized committee or subcommittee of
independent members of the Board to make incentive awards,
including stock-based awards, to Company employees, and
stock-based awards to non-employee members of ATIs Board
of Directors. Some key features of the Plan are set forth below,
and are more fully described under the caption Summary of
the Plan.
|
|
|
Plan Limits. The Plan as amended authorizes an aggregate
of 4.5 million shares for grant, subject to anti-dilution
adjustments upon the occurrence of significant corporate events.
No participant may receive stock options, stock appreciation
rights (SARs) or other stock grants for more than
1 million shares or with a value of more than
$15 million cash in any calendar year.
|
|
|
Plan Administration and Amendment. The Plan will continue
to be administered by a committee of comprised solely of
independent directors. The Plan, as it applies to key officers
and executives, will continue to be administered by the
Personnel and Compensation Committee. The Plan, as it applies to
non-employee directors, will continue to be administered by the
Nominating and Governance Committee. Stockholder approval is
required if the Plan is modified materially by increasing the
benefits accrued to participants under the Plan, increasing the
number of securities which may be issued under the Plan,
modifying the requirements for participation in the Plan, or
including a provision allowing the Board to lapse or waive
restrictions at its discretion, or in other cases that require
stockholder approval under the Internal Revenue Code (the
Code) unless such compliance is no longer desired
under the Code or necessary under any other applicable law or
rule of any applicable listing exchange.
|
|
|
Minimum Vesting and Performance Periods. Any stock
options and SARs that may be granted shall vest no sooner than
over a three-year period. The Company has chosen to not grant
stock options to employees as a matter of policy, although the
Committees retain discretion to do so. Restricted shares are
subject to a minimum forfeiture period of three years. Any
performance awards and certain other awards with performance
features are subject to a performance period of no less than one
calendar or fiscal year.
|
|
|
No Repricing or Discounted Awards. The Plan prohibits the
repricing of awards. In addition, no awards of stock options or
SARs will be granted with an exercise price of less than fair
market value of Company Common Stock on the date of grant.
|
|
|
No Liberal Share Counting. The Plan prohibits shares of
Common Stock that are tendered in payment of the exercise price
of an option, withheld to satisfy a tax withholding obligation,
or repurchased by the Company with option proceeds from being
used to increase the number of shares available for grant under
the Plan, thereby preventing liberal share counting.
|
21
|
|
|
No Liberal Change in Control Feature. The Plan as amended
provides that a change in control, as defined under the amended
Plan, is deemed to occur upon the consummation of a specified
merger, consolidation, reorganization, liquidation or sale
transaction.
|
|
|
Dividends. As the Company previously announced in April
2009, under the Plan as amended, no cash or stock
dividends will be paid on grants of restricted stock prior to
the time that the restrictions lapse.
|
|
|
Other Features. The Plan is designed to allow awards made
under the Plan to qualify as performance-based compensation
under Section 162(m) of the Code.
|
Why
the Board of Directors Believes that You Should Vote to Approve
the Amended and Restated 2007 Incentive Plan
The Board of Directors recommends a vote in favor of approval of
the Plan because it believes that it is in the best interests of
the Company and its stockholders, principally for the following
reasons:
|
|
|
Equity Compensation Awards are a Critical Recruitment and
Retention Tool. The Company believes that its success and
performance depends on its ability to attract, motivate and
retain talented employees and directors. Equity awards under our
long-term incentive compensation programs are a key component to
maintaining a total compensation package that is competitive in
the Companys industry. A competitive compensation program
is essential for attracting and retaining such employees, and
equity compensation awards are an important and expected
component of such program. Approval of the Plan with the
increased authorized shares is critical because shares available
under the existing plan are largely exhausted. The Company would
be at a significant competitive disadvantage if it could not use
Company stock-based awards to compensate employees.
|
|
|
Our Compensation Programs are Aligned with Stockholder
Interests. We believe that, equity compensation is, by its
nature, performance-based compensation. Equity compensation has
been an important component of total compensation at our Company
for many years because it is an effective tool for getting
managers and employees to think and act like stockholders.
Equity compensation fosters an employee ownership culture and
motivates employees to create stockholder value because the
value employees realize from equity compensation is based on the
Companys stock performance. A significant portion of our
compensation is performance-oriented and at risk for
our key employees, with achievement tied to the Companys
performance. The Company has stock ownership guidelines for its
executives and targets long-term incentive compensation at the
midpoint of its peer group. Our equity compensation programs,
which emphasize restricted stock and performance awards, are our
principal means of aligning the interests of employees with
those of stockholders. Equity compensation also promotes a focus
on long-term value creation because equity compensation awards
are subject to vesting
and/or
performance conditions, and generally provide the greatest value
to employees when held over the long-term. If the Plan is
approved, we will be able to maintain our means of aligning the
interests of our employees with the interests of our
stockholders.
|
|
|
Plan Approval Would Avoid Disruption in Compensation
Programs. If the Plan is not approved by the stockholders,
the Company will have only approximately 70,375 shares of
Common Stock available for issuance to employees and directors.
Therefore, to remain competitive without providing equity
compensation, the Company would likely replace the components of
the compensation package consisting of equity awards with cash
or with other instruments that may not necessarily align
employee interests with those of stockholders as well as equity
awards would have done. In addition, replacing equity awards
with cash will increase cash compensation expense and use cash
and other resources that could be better utilized if reinvested
in our business.
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The Company has Demonstrated Commitment to Sound Equity
Compensation Practices and
Pay-For-Performance.
Our equity compensation practices are designed to be in
line with peer group norms, and we believe that our historical
share usage has been responsible and mindful of stockholder
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22
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interests. In 2003, the Company ceased issuing stock options to
employees and stopped issuing stock options to directors after
2006. Moreover, as explained in the Compensation Discussion and
Analysis section of this Proxy Statement, the Companys
long term compensation programs are tied to Company performance.
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Summary
of the Plan
Purpose of the
Plan
The purpose of the Plan is to motivate and reward key officers
and executives who contribute to Company profitability and, in
the case of stock-based awards, to give these individuals and
members of the Board of Directors an ownership interest in the
Company and a proprietary and vested interest in the
Companys growth and financial success. The Board believes
that the Plan enhances the Companys ability to attract and
retain individuals with exceptional managerial, technical and
professional skills upon whom, in large measure, the sustained
growth and profitability of the Company depend.
Comparison with
Existing Plan
The Plan continues to provide that a variety of stock- and
cash-based awards are available for grant under the Plan,
including for the issuance of stock awards to members of
ATIs Board of Directors.
Shares Authorized
and Award Limits
As amended, the Plan authorizes the issuance of up to a total of
4.5 million shares of Common Stock of the Company. The
number of shares available for issuance under the Plan will be
subject to anti-dilution adjustments upon the occurrence of
significant corporate events.
The Plan also contains annual limits on awards to individual
participants. In any calendar year, no participant may be
granted stock options, stock appreciation rights or other stock
grants with regard to more than 1 million shares of Common
Stock and more than $15 million in cash.
Administration
The Personnel and Compensation Committee will continue to
administer the Plan as it applies to key officers and
executives, and the Nominating and Governance Committee will
continue to administer the Plan as it applies to members of the
Board of Directors. Each of the Personnel and Compensation
Committee and the Nominating and Governance Committee, as
applicable, is individually referred to as the ATI
Committee and are collectively referred to as the
ATI Committees. Members of the ATI Committees must
be non-employee directors and outside
directors to the extent required to meet applicable
regulatory requirements. This means that they cannot be current
or former Company officers or employees and may not receive
compensation from the Company except in their capacity as
directors. The independent members of the Board may assume
responsibilities otherwise assigned to the ATI Committees and
may amend, alter or discontinue the Plan at any time. However,
none of these actions may impair a participants existing
rights without the participants consent. Also, the
independent Board members and the ATI Committees cannot amend
the Plan without stockholder approval if the amendment would
materially modify the Plan by increasing the benefits accrued to
participants under the Plan, increasing the number of securities
which may be issued under the Plan, modifying the requirements
for participation in the Plan, or including a provision allowing
the Board to lapse or waive restrictions at its discretion, or
in other cases, if approval is required to qualify for or comply
with applicable tax or regulatory requirements.
As the Plan applies to employees, the Personnel and Compensation
Committee has the authority to select employees to whom it will
grant awards, to determine the types of awards and the number of
shares covered, to set the terms and conditions of the awards
and to cancel or suspend awards. As the Plan applies to
non-employee directors, the Nominating and Governance Committee
has the authority to determine the types of awards to be granted
to directors and the number of shares covered, to set the terms
and conditions of the awards and to cancel or suspend awards.
Each ATI Committee also has the
23
authority to interpret the Plan, establish and modify
administrative rules, impose conditions and restrictions on
awards, determine whether a transition to consultant or
non-employee director constitutes a retirement, and take such
other action it considers necessary or appropriate.
Eligibility
All officers and key employees of the Company and its
subsidiaries are eligible to be selected as participants. All
non-employee members of the Board of Directors are eligible to
receive stock awards under the Plan. The Personnel and
Compensation Committee may also grant awards, other than
incentive stock options, to non-employees who, in its judgment,
render significant services to the Company or any of its
subsidiaries. The Company currently has approximately 350
officers and key employees who participate in the Plan and eight
non-employee directors who participate in the Plan. In the event
that the Plan as amended would have been in effect in 2009, no
grants to the executive officers would have changed.
Term
The Plan has an expiration date of May 1, 2017.
Stock
Options
The Personnel and Compensation Committee may grant incentive
stock options under the Internal Revenue Code to employees and
the ATI Committees may grant nonqualified options that do not
qualify as incentive stock options to participants. The ATI
Committees determine the option grant price and the term of the
option, although the price must be equal to or greater than the
fair market value of the Common Stock on the date of the grant,
and the price and terms of incentive stock options must meet the
requirements of the Internal Revenue Code. An option is
exercisable at such times as the ATI Committees determine.
The participant must pay the option exercise price in full on
exercise. The participant may pay the price in cash, by
surrendering shares of Common Stock with a value equal to the
exercise price, or by a combination of cash, shares of Common
Stock, or other consideration approved by the respective ATI
Committee.
Options will terminate on the terms and conditions that the ATI
Committee specifies in the award agreement, although the term
cannot exceed ten years. Generally, when a participants
employment terminates for any reason other than death or
disability or retirement (as defined in the Plan), any stock
options that were not then exercisable expire and options that
were then exercisable expire 30 days after the date of
termination. In general, when a participants employment
terminates due to death, all outstanding stock options vest and
are exercisable for twelve months from the date of death. In the
case of disability or retirement, options continue to vest and
are exercisable over their remaining term.
The ATI Committees may permit participants to transfer stock
option awards to immediate family members or family trusts.
Otherwise, stock option awards are not transferable during the
participants lifetime.
The Company has chosen to not grant stock options as a matter of
policy, and has not granted stock options to employees since
2003. Although the ATI Committees retain discretion to award
options, there is no present intention to do so except in
recruitment or retention situations.
Stock
Appreciation Rights
A stock appreciation right entitles the holder to receive, upon
exercise, the excess of the fair market value of the shares on
the exercise date over the SAR exercise price. The ATI
Committees may grant SAR awards as stand-alone awards or in
combination with a related option award under the Plan. The
terms and conditions that govern the related stock option
generally govern SARs granted in combination with options.
24
The ATI Committee determines the exercise prices of SARs, which
will not be less than the fair market value of the underlying
stock on the date of the grant. Payment upon exercise of SARs
will be in cash or Common Stock, as determined by the ATI
Committee.
Restricted
Shares
Restricted shares are shares issued with conditions or
contingencies. Until the conditions or contingencies are
satisfied or lapse, the restricted stock is subject to
forfeiture. The ATI Committees establish the terms and
conditions applicable to a restricted stock award. Under the
terms of the Plan, a grant of restricted shares is subject to a
minimum forfeiture period of at least three (3) years or,
so long as vesting is based on performance criteria, at least
one (1) year, unless the ATI Committee deems a shorter
period is necessary for recruitment purposes. With respect to
performance-based grants to covered employees (generally, the
named officers in the Summary Compensation Table of the Proxy
Statement), performance targets will be specified levels of one
or more of the performance goals specified in the Plan. See
Performance-Based Compensation below.
A recipient of restricted shares has the right to vote the
shares and to receive dividends on the shares once the shares
are earned unless the ATI Committee determines otherwise. If an
employee participant ceases to be an employee before the end of
the contingency period, the award is forfeited, subject to such
exceptions as the ATI Committee may authorize.
The ATI Committees, in their sole discretion, may waive all
conditions or contingencies relating to a restricted share award
under certain circumstances (including the death, disability, or
retirement of a participant, or a material change in
circumstances arising after the date of grant) and subject to
such terms and conditions as it deems appropriate.
Performance
Awards
The ATI Committees may grant performance awards to participants
on the terms and conditions specified by the ATI Committees.
Under a performance award, a participant receives a payment from
the Company based on the extent to which predetermined
performance targets are achieved over a specified award period.
Performance awards may be denominated
and/or paid
in cash, Common Stock or a combination of both, as determined by
the ATI Committees.
The ATI Committees establish the duration of an award period and
the performance targets. They also decide whether the
performance levels have been achieved, what amount of the award
will be paid and the form of payment, which may be cash, stock
or other property or any combination.
In the case of awards to covered employees, the targets will
generally consist of attaining specified levels of one or more
of the performance goals specified in the Plan. See
Performance-Based Compensation below. When
circumstances occur which the ATI Committees determine to be
extraordinary and to cause predetermined performance targets to
be an inappropriate measure of achievement, the ATI Committees,
in their discretion, may adjust the performance targets to the
extent consistent with the provisions of the Internal Revenue
Code relating to the deductibility of the award for federal
income taxes.
Generally, a participant will forfeit all rights to a
performance award if the participant terminates employment
before the end of the award period, unless the Personnel and
Compensation Committee determines otherwise. On retirement, if
the Personnel and Compensation Committee determines that an
award should be paid, or in the case of death or disability, the
award will be pro-rated based on the number of months the
participant was employed during the award period.
Other Stock-Based
Awards
The ATI Committee may make other awards of stock purchase rights
or cash awards, Common Stock awards or other types of awards
that are valued in whole or in part by reference to the value of
the Common Stock. The ATI Committee will determine the
conditions and terms that apply to these awards.
25
Short-Term Cash
Incentive Awards
The Personnel and Compensation Committee may make
performance-based annual cash incentive awards to covered
employees, as follows:
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The class of persons covered consists of those senior executives
who the ATI Committee determines to be subject to
Section 162(m) of the Internal Revenue Code.
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The targets for annual incentive payments to covered employees
will consist only of specified levels of the performance goals
specified in the Plan. See Performance-Based
Compensation below.
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In administering the incentive program and determining incentive
awards, the Personnel and Compensation Committee will not have
the flexibility to pay a covered executive more than the
incentive amount indicated by the executives attainment of
the performance goals under the applicable payment schedule. The
Personnel and Compensation Committee will have the flexibility,
in its discretion, to reduce this amount.
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Change in
Control
In order to preserve the value of outstanding awards for
participants in the event of a change in control of the Company,
unless the ATI Committees determine otherwise at the time of the
grant of a particular award, if a change in control of the
Company occurs:
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stock options and SARs immediately become exercisable;
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the restrictions on all restricted shares lapse;
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all performance awards become immediately payable; and
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all other awards under the Plan vest and become nonforfeitable.
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A change in control of the Company means any of the following
events:
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the acquisition of 25% or more of the Common Stock by a person
or group, other than an acquisition approved by the Board of
Directors;
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a change in the composition of the Companys Board of
Directors such that the individuals who constitute the Board of
Directors as of the effective date of the Plan no longer
constitute at least two-thirds of the Companys Board of
Directors (unless the change is made by persons nominated by a
Board at least two-thirds of whom were incumbent Board members);
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consummation of certain mergers, reorganizations or
consolidations; or
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consummation of a complete liquidation or dissolution of the
Company or a sale or other disposition of substantially all of
the Companys assets.
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Performance-Based
Compensation
Section 162(m) of the Internal Revenue Code limits the
amount of the deduction that a company may take on its
U.S. federal tax return for compensation paid to any
covered employees (the Code refers to the named officers in the
Summary Compensation Table of the proxy statement as
covered employees.) The limit is $1 million per
covered employee per year, with certain exceptions. This
deductibility cap does not apply to performance-based
compensation, if approved by the stockholders. The Company
believes that certain awards under the Plan will qualify as
performance-based compensation, if stockholders approve the Plan
and it is otherwise administered in compliance with Code
Section 162(m).
The Plan contains a number of measurement criteria that the
Personnel and Compensation Committee may use to determine
whether and to what extent a covered employee has earned a
restricted stock award, performance award, other stock-based
award or a short-term cash award.
26
The measurement criteria that the Personnel and Compensation
Committee may use to establish specific levels of performance
goals include any one or a combination of the following:
operating income, operating profit, income before taxes, net
income, earnings per share, return on investment or working
capital, return on stockholders equity, economic value
added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), balanced scorecard,
reductions in inventory, inventory turns and on-time delivery
performance. The Personnel and Compensation Committee may set
performance goals based on the achievement of specified levels
of corporate-wide performance or performance of the Company
subsidiary or business unit in which the participant works,
safety measures, and other quantifiable, objective measures of
individual performance relevant to the particular
individuals job responsibilities. The Committee may make
downward adjustments in the amounts payable under a
performance-based compensation award, but it may not increase
the award amounts or waive the achievement of a particular goal.
Tax Aspects of
the Plan
The grant of a nonqualified stock option or SAR under the Plan
has no U.S. federal income tax consequences for the
participant or the Company. Upon exercise of a stock option or
SAR, the Company may take a tax deduction and the participant
realizes ordinary income. The amount of this deduction and
income is equal to the difference between the fair market value
of the shares on the date of exercise and the exercise price of
the stock option or SAR. The Personnel and Compensation
Committee may permit participants to surrender Common Stock or
have Common Stock withheld from the shares otherwise issuable in
connection with the award to satisfy the required withholding
tax obligation.
In the case of incentive stock options awarded to an employee,
the participant does not recognize income on the grant or the
exercise and the Company is not entitled to a deduction.
However, the amount by which the fair market value of the Common
Stock on the date of exercise exceeds the exercise price is
counted in determining the participants alternative
minimum taxable income. When the participant disposes of the
shares acquired on the exercise of an incentive stock option,
the gain or loss recognized is treated as long-term capital gain
or loss unless the disposition occurs within one year after the
exercise or within two years after the grant of the incentive
stock option; if the participant makes an earlier disposition of
these shares, the participant may recognize ordinary income, to
the extent the fair market value of the Common Stock on the date
of exercise exceeds the exercise price (but not in excess of the
amount the participant realizes in connection with the
disposition) and the Company may take a deduction at the same
time and for the same amount. The participant will also
recognize capital gain, to the extent the amount realized on the
sale of the Common Stock exceeds the participants basis in
the Common Stock, which gain will be long-term or short-term,
depending on how long the participant has held the Common Stock.
Regarding Plan awards (other than stock options or SARs) that
are settled either in Common Stock or other property that is
either transferable or not subject to substantial risk of
forfeiture, the participant must recognize ordinary income equal
to the cash or the fair market value of the Common Stock or
other property received. The Company may take a deduction for
the same amount.
Regarding Plan awards (other than stock options or SARs) that
are settled either in cash or in Common Stock or other property
that is subject to contingencies restricting transfer and to a
substantial risk of forfeiture, the participant must recognize
ordinary income equal to the cash or the fair market value of
the Common Stock or other property received (less any amount
paid by the participant) when the Common Stock or other property
first becomes transferable or not subject to substantial risk of
forfeiture, whichever occurs first. The Company may take a
deduction at the same time and for the same amount.
The Personnel and Compensation Committee has discretion as to
any award under the Plan to grant a participant a separate cash
amount at exercise, vesting or lapse of restrictions to meet
mandatory tax withholding obligations or to reimburse for any
individual taxes paid.
27
The deductibility under the Internal Revenue Code of
compensation payable under the Plan to covered employees is
subject to the requirements of Section 162(m). The
Incentive Plan is intended, with the approval of stockholders,
to meet such requirements to the extent the awards are
performance-based.
Recent Share
Price
On March 17, 2010 (the record date for the Annual Meeting),
the closing trading price on the New York Stock Exchange for
Company Common Stock was $52.57 per share.
Director
Restricted Stock and Awards to Executives
Pursuant to the Companys Non-Employee Director Restricted
Stock Program, the Nominating and Governance Committee intends
to make an annual retainer fee award of Restricted Shares having
a value of $100,000 to each member of the Board of Directors,
subject to the approval of the stockholders of the Amended and
Restated 2007 Incentive Plan at the 2010 Annual Meeting. The
valuation used to determine the number of shares to be issued
will be based on the average of high and low trading prices on
the date of the grant. Generally, the stock awards will not vest
for three years. For future grants, during the restriction
period, directors will not be entitled to receive dividends paid
on the restricted shares until the restrictions lapse, and
restricted shares will vest on death, retirement with the
consent of the Company, or a change in control (as defined in
the Incentive Plan). See Director Compensation.
While the Personnel and Compensation Committee has established
general guidelines with respect to its compensation programs for
officers and key employees which are described in the
Compensation Discussion and Analysis section of this Proxy
Statement, the designation of specific participants and the
amount of any other award that may be made under the Plan will
be determined in the discretion of the Personnel and
Compensation Committee.
Vote Required for
Approval
Approval of the amendment and the restatement of the Plan
requires the affirmative vote of a majority of votes cast by
holders of shares of Common Stock present in person or
represented by proxy and entitled to vote at the meeting,
provided that the number of votes cast must constitute a
majority of the votes entitled to be cast at the meeting. The
Board has approved the Plan and believes it to be in the best
interests of the Company and the stockholders.
THE BOARD OF
DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE APPROVAL OF
THE AMENDED AND RESTATED 2007 INCENTIVE PLAN.
28
Ernst & Young LLP (Ernst &
Young) has served as independent auditors for the Company
since August 15, 1996. They have unrestricted access to the
Audit Committee to discuss audit findings and other financial
matters. The Audit Committee of the Board of Directors believes
that Ernst & Young is knowledgeable about the
Companys operations and accounting practices and is well
qualified to act in the capacity of independent auditors.
In appointing Ernst & Young as the Companys
independent auditors for the fiscal year ending
December 31, 2010, and making its recommendation that
stockholders ratify the selection, the Audit Committee
considered whether the audit and non-audit services
Ernst & Young provides are compatible with maintaining
the independence of the our outside auditors.
If the stockholders do not ratify the selection of
Ernst & Young, the Audit Committee will reconsider the
selection of Ernst & Young as the Companys
independent auditors.
Representatives of Ernst & Young will be present at
the Annual Meeting. They will be given the opportunity to make a
statement if they desire to do so, and they will be available to
respond to appropriate questions following the Annual Meeting.
THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS FOR FISCAL YEAR 2010.
29
Audit
Committee Pre-Approval Policy
The Audit Committee has adopted a policy that sets forth the
manner in which the Audit Committee will review and approve all
services to be provided by Ernst & Young before the
firm is retained to perform the service. Under this policy, the
engagement terms and fees of all audit services and all
audit-related services are subject to the specific pre-approval
of the Audit Committee. In addition, while the Committee
believes that the independent auditor may be able to provide tax
services to the Company without impairing the auditors
independence, absent unusual circumstances, the Audit Committee
does not expect to retain the independent auditor to provide tax
services. Under the policy, the Committee has delegated limited
pre-approval authority to the Chair of the Committee with
respect to permitted, non-tax related services; the Chair is
required to report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Audit Committee
pre-approved all audit and non-audit services provided by
Ernst & Young in 2009 and 2008.
Independent
Auditor: Services and Fees
The fees and expenses billed by Ernst & Young for the
indicated services performed during 2009 and 2008 were as
follows:
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Service
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2009
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2008
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Audit fees
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$2,973,000
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$3,160,000
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Audit-related fees
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335,000
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224,000
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Tax fees
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26,000
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All other fees
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2,000
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4,000
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Total
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$3,310,000
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$3,414,000
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Audit fees consisted of fees related to the annual
audit of the Companys consolidated financial statements
and review of the financial statements in our Quarterly Reports
on
Form 10-Q,
Sarbanes-Oxley Section 404 attestation services, audit and
attestation services related to statutory or regulatory filings,
the issuance of consents, and captive insurance company audits.
Audit-related fees consisted of fees related to the
audits of employee benefit and pension plans.
Tax fees consisted of fees related to IRS transcript
reviews.
All other fees consisted of subscriptions to
Ernst & Youngs web-based EYOnline accounting
reference library.
30
Audit
Committee Report
The following is the report of the Audit Committee with respect
to the Companys audited financial statements for the year
ended December 31, 2009, which include the consolidated
balance sheets of the Company as of December 31, 2009 and
2008, and the related consolidated statements of operations,
stockholders equity and cash flows for each of the three
years in the period ended December 31, 2009, and the notes
thereto (collectively, the Financial Statements).
Management is responsible for the Companys internal
controls and financial reporting process. Ernst &
Young LLP (Ernst & Young), the
Companys independent auditors, are responsible for
performing an independent audit of the Companys Financial
Statements in accordance with generally accepted auditing
standards and expressing an opinion as to their conformity with
generally accepted accounting principles and for attesting to
managements report on the Companys internal control
over financial reporting. One of the Audit Committees
responsibilities is to monitor and oversee the financial
reporting process and to review and discuss managements
report on the Companys internal control over financial
reporting.
The Audit Committee has reviewed, met and held discussions with
the Companys management, internal auditors, and the
independent auditors regarding the Financial Statements,
including a discussion of quality, not just acceptability, of
the Companys accounting principles, and Ernst &
Youngs judgment regarding these matters.
The Audit Committee discussed with the Companys internal
auditors and independent auditors matters required to be
discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU§ 380). The Audit Committee met with the
internal auditors and independent auditors, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, and the overall quality of the Companys
financial reporting. The Audit Committee has also discussed with
Ernst & Young matters required to be discussed by
applicable auditing standards.
The Audit Committee has received the written disclosures and the
letter from Ernst & Young required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Audit Committee concerning independence and has also
considered the compatibility of non-audit services with
Ernst & Youngs independence. This information
was also discussed with Ernst & Young.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors at the
February 25, 2010 meeting of the Board that the Financial
Statements be included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 as filed with the
Securities and Exchange Commission. The Board has approved this
inclusion.
Submitted by:
AUDIT COMMITTEE, whose members are:
Michael J. Joyce, Chairman
James C. Diggs
Barbara S. Jeremiah
Louis J. Thomas
John D. Turner
OTHER
BUSINESS
The Company knows of no business that may be presented for
consideration at the meeting other than the items indicated in
the Notice of Annual Meeting. If other matters are properly
presented at the meeting, the persons designated as proxies on
your proxy card may vote at their discretion.
Following adjournment of the formal business meeting, L. Patrick
Hassey, Chairman, President and Chief Executive Officer, will
address the meeting and will hold a general discussion period
during which the stockholders will have an opportunity to ask
questions about the Company and its business.
31
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
This Compensation Discussion and Analysis
(CD&A) reviews the Companys executive
compensation programs, and the policies and decisions of the
Personnel and Compensation Committee of the Board of Directors
(the Committee) with respect to the Companys
named executive officers listed in the Summary Compensation
Table on page 49 (the named officers).
The Committee has a two-fold task with respect to the
Companys compensation programs:
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linking executives compensation to performance objectives
that mesh with the Companys business plans and advance the
interests of its stockholders, and
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supervising managements implementation of the compensation
programs for the Companys other key employees.
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The purposes of the Companys executive compensation
programs are:
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to provide compensation levels benchmarked to attract and retain
exceptional managerial talent for the present and
future, and
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to offer incentive-based programs (i) in order to challenge
managers to achieve business goals within their area of
authority but without imprudent risk and (ii) in the
interests of Company stockholders.
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The Company uses a pyramid approach to administer
its compensation programs. Under this pyramid
approach, an individuals position and level of
responsibility determines the compensation plans in which the
individual is entitled to participate. The following performance
pyramid summarizes the principles of each of the compensation
plans in which the named officers participate.
32
©
2010 ATI
Key Executive
Performance Plan (KEPP)
The KEPP is a cash-based incentive plan with a three-year
performance measurement period. Only members of
managements executive committee (a group that includes the
named officers) are eligible to participate in this plan.
Performance is measured by the degree to which, for
Level One, pre-set goals of Company income before taxes,
and, for Level Two, specific operational and team-oriented
goals, are achieved each over the three-year period. The purpose
of the program has been to drive the Companys earnings
during the three-year period and simultaneously target the
specific long-range business objectives achievable over the
three-year period and the long term. The overall objective has
been to build the platform on which the Company can achieve
long-term, profitable growth.
Total Shareholder
Return Incentive Compensation Program
(TSRP)
Under the TRSP, awards denominated in shares of Company Common
Stock are earned to the extent that returns on Company Common
Stock (generally, trading price increase plus dividends) exceed
the returns on the common stock of members of a peer group over
a three-year performance measurement period. Approximately 50
key executives (including the named officers) participate in
this plan. The purpose of this program is to focus management
directly on returns to stockholders.
Performance/Restricted
Stock Program (PRSP)
Shares of performance/restricted stock are awarded to
participants under the PRSP. The restrictions provide that
one-half of each award will vest, if at all, only if pre-set
earnings targets are achieved over a three-year period. Vesting
of the other half will accelerate if the performance targets are
reached after three years, but otherwise will vest only if the
employee is employed by the Company on the fifth anniversary of
the grant. Approximately 100 key managers participate in this
plan (including the named officers). However, because this
broader group of managers represents the pool of talent for
future management, the plan has a time-based vesting retention
feature. This program is primarily designed to drive Company
earnings.
Annual Incentive
Plan (AIP)
The AIP is a cash-based, annual incentive bonus plan in which
approximately 350 key employees participate (including the named
officers). Performance is measured based on a weighted formula
that takes into account operating earnings, operating cash flow,
manufacturing improvements, employee safety, environmental
compliance and responsiveness to customers. This diverse matrix
of measures allows the Committee, for the named officers, to
direct attention to goals and achievements within each
participants direct control.
Base
Salary
All salaried employees are paid a base salary that is
benchmarked against a group of public companies with which the
Company competes for salaried employees. For reasons driven by
the geography of the Companys operating locations and
based on skill-set requirements, the peer group for salary
benchmarking is somewhat different from the peer group used for
measuring relative stock price returns. The peer group for stock
price returns is focused more on the Companys industrial
and capital markets classifications.
33
Compensation
Philosophy
For many years, and continuing in 2009, the Committees
approach to all manager compensation has been to offer a package
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. The Committee develops a prudent balance of annual
and three-year programs measuring diverse criteria to discourage
inappropriate risk. With respect to the named officers, the
program consists of base salary, potential annual cash-based
incentives, and longer-term (generally three-year) cash
and/or
equity compensation plans. The Committees intention is for
a substantial portion of the named officers compensation
to be at risk, and for total compensation for the named officers
to be at approximately the midpoint of peer group compensation,
if actual Company performance is at the midpoint of actual peer
group performance.
The Committee has consistently determined that the executive
compensation program be:
|
|
|
Performance-oriented, with opportunities for superior
compensation for superior results;
|
|
|
Attractive for long-term careers with the Company, with
appropriate retention features;
|
|
|
Linked to the interests of stockholders; and
|
|
|
Competitive in the aggregate.
|
Performance-Oriented
The Committee believes that management employees should have
significant portions of compensation at risk by linking
compensation to the attainment of Company performance
goals that is, the more senior the manager, the
larger the percentage of compensation that should be at risk.
The Committee believes that, if performance exceeds goals, total
compensation should exceed the midpoint of compensation for the
peer group described below, and that total compensation should
be less than the midpoint of the peer group if actual Company
performance does not achieve target levels.
The Committee views the executive compensation program as a
management tool that, through goal and target setting,
encourages the management team to achieve or surpass the
Companys business objectives. The array of goals and
targets used across all management levels, which include both
financial performance measures as well as pre-set goals within a
particular participants area of responsibility, are
designed to encourage a team-oriented approach to achieving
Company profitability objectives and positioning the Company for
the challenges of the future. The Committee scales compensation
challenges and opportunities by level of responsibility and
focuses performance on measures particular managers can most
directly influence. The Committee believes that the performance
goals and targets will challenge, attract and retain superior
managers experienced in the Companys businesses and direct
their efforts toward achieving specific tasks that the Board and
senior executives determine to be necessary for profitable
growth.
Attractive for
Long-Term Careers
The executive compensation program is designed to attract and
retain a deep pool of managerial talent that shares the
Companys commitment to enhancing stockholder value in the
short and longer terms. Base salaries are generally intended to
be at the approximate mid-point of the peer groups described
below. In addition, the Company offers a number of competitive
retirement plans which are described in more detail under the
heading Other Compensation Policies Defined
Contribution Plans.
Linking
Compensation to the Interests of Stockholders
Over the last several years, the Committee has implemented its
pay-for-performance
philosophy by using performance metrics, such as earnings,
income before taxes, stock price performance and the completion
of operational tasks, as the principal goals for the
performance-oriented programs, particularly for the named
officers. Since 2004, the Companys business plans have
progressively focused on the profitable growth of the Company,
proceeding through stages of reversing losses
34
incurred in years prior to 2004, then diversifying the
Companys mix of products, and then toward achieving market
leadership through demonstrated quality in core product lines
with an emphasis on the most profitable product lines.
Throughout, the Companys business plans have focused on
internal generation of the funds necessary for sustainable
profitable growth and product and end market diversification.
The Committee believes that focusing compensation programs first
on earnings, income before taxes and stock performance directs
managements energies toward achieving those longer term
goals.
The Company also has implemented stock ownership guidelines for
its directors and officers, as discussed in the Other
Compensation Policies section on page 44 of this
Proxy Statement.
Competitive in
the Aggregate
The Committee reviews with outside advisors Mercer (US), Inc.
(Mercer) and K&L Gates LLP the compensation
forms and practices at peer groups of companies (i) with
which the Company competes for talent and skill sets in the
Companys multiple locations and (ii) in our
industrial classification. The Committee uses this information
as benchmarks to set base compensation levels throughout the
management team at approximate mid-points of these groups. As
described above, the incentive portions of the compensation
programs provide opportunities to earn additional amounts if
performance goals are met or exceeded, or less if performance
goals are not met.
Process
Role of the
Committee
The Personnel and Compensation Committee is composed of three
independent, non-employee directors. With regard to the named
officers and other members of managements executive
committee, the Committee has the sole responsibility to carry
out the Companys overarching policy of linking the
compensation program to the interests of stockholders. The
Committee also has the responsibility to outline the programs
for management employees more generally and to supervise
managements implementation of those programs to ensure a
continuing source of leadership for the Company.
Monitoring of
Performance and Progress Throughout the Year
The Committee meets periodically during the year to monitor
Company and individual performance. At these meetings, the
Committee is provided with current but unaudited financial data
and with internal Company reports on key performance measures to
assess managements interim progress toward achieving
business objectives and the potential payouts under the plans.
Portions of these meetings are attended by members of executive
management and, from time to time, by the Committees
outside compensation and legal advisors, with and without
management being present. These meetings assist the Committee
with its evaluation of whether the compensation programs
continue to support and direct performance as required to
achieve the Companys business goals.
Compensation
Consultant
Beginning in late 2006, and for 2009, the Committee retained
Mercer, one of few nationally recognized executive compensation
consultants, to serve as its independent outside compensation
consultant. The Committee, under its charter, has the sole
authority to retain and terminate any compensation consultant
used in the evaluation of executive compensation and has the
sole authority to approve the retention terms of the consultant,
including fees. The compensation consultant is retained solely
by the Committee and is responsible only to the Committee.
Implicit in the determination to retain a consultant is the
Committees review of the appropriate qualifications of the
consultant, including independence. Upon the retention of a
compensation consultant, the Committee assures itself as to the
independence of the consultant and re-evaluates the
consultants independence on an ongoing basis. The
Committee may, at any time, contact the consultant without
interaction from management. With regard to executive
compensation matters, Mercer assists the Committee in reviewing
the continued suitability of the peer
35
group used for setting base pay amounts and stockholder return
achievement, and for reports on comparable company executive
compensation practices.
Mercer and its affiliates have been retained by the Company to
provide services unrelated to executive and director
compensation matters and have provided these other services to
the Company for several years. The Company and the Committee
believe that, even though Mercer and its affiliates provide
certain non-compensation consulting services, it does not affect
Mercers ability to provide competent and independent
advice relating to executive or director compensation matters.
The Committee played no role in reviewing or approving the
following other services provided by Mercer to the Company as
these services were approved by management in the normal course
of business. The Company utilizes Marsh, Inc., a national
insurance broker, for placement of the Companys various
insurance policies and related consulting services, for which
aggregate fees in 2009 were approximately $1.2 million.
Also in 2009, Mercer Health and Benefits, Inc. provided
consulting services relating to health and benefits matters,
such as active employee and retiree medical expenses and
premiums, and data-gathering and analysis of medical costs, for
an aggregate fee of approximately $409,000. Mercer (US), Inc.
provided consulting and actuarial services and studies relating
to the Companys defined benefit pension plan for fees
totaling approximately $1.1 million. Mercer HR Services
provided administrative services for the Companys defined
contribution plans and health benefit and defined benefit plans,
including ongoing daily benefit administration, call center and
website administration, and open enrollment for health benefit
plans, for fees totaling approximately $5.5 million in
2009. Total fees for consulting services relating to executive
and director compensation were approximately $147,000 for 2009.
Peer Group
Companies and Benchmarking
The Committee recognizes that there are no public companies that
engage in the full range of the Companys specialty metals
production, fabrication, marketing and distribution. The
Committee has selected the peer group companies on the bases of
relative similarity to one or more of the aspects of the
Companys businesses and on the risk profiles typically
assigned to those companies by the capital markets.
The Committee recognizes that some companies in the peer group
are more heavily involved in one aspect of the Companys
business than in others. For example, two members of the peer
group are involved almost exclusively in the titanium business
(and one more in fabrication than production) while others
businesses are primarily focused on less specialized stainless
steel production and distribution, and some are more heavily
involved in sales rather than in production or fabricating.
However, on balance, the Committee believes the peer group is
representative of companies in the Companys industry that
serve similar markets.
In 2008, the Company expanded its peer group to reflect a
broader view of the Companys products, markets and
services. For 2009 (including the
2009-2011
performance period), the same peer group was used as in 2008,
and consisted of the following companies:
|
|
|
AK Steel Holding Corporation
|
|
Precision Castparts Corp.
|
Alcoa Inc.
|
|
Reliance Steel & Aluminum Co.
|
Brush Engineered Materials
|
|
RTI International Metals, Inc.
|
Carpenter Technology Corporation
|
|
Schnitzer Steel Industries, Inc.
|
Castle (AM) & Co.
|
|
Steel Dynamics, Inc.
|
Commercial Metals
|
|
Timken Co.
|
Gerdau Ameristeel Corp.
|
|
Titanium Metals Corporation
|
Kennametal Inc.
|
|
United States Steel Corporation
|
Ladish Co.
|
|
Universal Stainless & Alloy Products
|
Nucor Corporation
|
|
Worthington Industries
|
The Five-Year Total Stockholder Return section of
this Proxy Statement shows the peer groups performance
over the past five years relative to Company performance and the
S&P 500 Index.
36
In addition to peer group information, Mercer also provides the
Committee with information as to the compensation practices
across a wider group of industrial companies. With primary
reliance on the peer group, and using information about the
wider group of companies as a check against the peer group
information, this benchmarking process assists the
Committee with assessing the competitiveness of the
Companys programs and earnings opportunities relative to,
as well as determining the approaches to compensation used by,
the peer companies and other industrial enterprises.
Inherent in this process is a review of the financial
performance of such companies to determine the relative efficacy
of the programs they use in comparison to the Companys
goals and plans. The Committee considers the Companys
financial performance and other information they receive in the
course of their service on the Board of Directors and on other
Board committees. All of the foregoing information enables the
Committee to evaluate the relative performance of the
Companys senior management team individually and in the
aggregate and to make informed judgments concerning compensation
programs, methods and award opportunities.
The Committee believes that the benchmarking process provides an
important frame of reference for measurement and a perspective
of competitive practices, but should not be the sole determinant
of compensation practices at the Company. The Committee also
takes into account the Companys specific business plans
and opportunities in order to fashion compensation programs
intended to incentivize employees to achieve the Company
business plans.
Internal Pay
Equity
The Committee has been advised by Mercer regarding the relative
compensation among the named officers. Peer company practices
generally focus on traditional job functions within the
portfolio associated with a specific title. For the past several
years and in 2009, the Committees practices for setting
base compensation and incentive opportunities for two executive
vice presidents recognizes that the functions of these
individuals are collaborative and each embraces a broader skill
set than traditional titles imply. For the other three named
officers, the job functions reflect those normally associated
with a particular title. Base compensation and incentive
opportunities for the other three named officers reflect the
degree of responsibility inherent in the operations supervised.
In setting compensation opportunities, the Committee maintains
appropriate ratios of compensation between the CEO compensation
opportunities and the compensation opportunities of the
executive vice presidents of the Company and of each of the
other named officers. Recognizing the ultimate management
responsibility of the CEO, base pay and compensation
opportunities are significantly greater for the CEO than for the
two executive vice presidents and the other named officers of
the Company.
Implementation of
Compensation Levels and Opportunities
Near the end of each year, the Board (including members of the
Committee) receives the Companys annual and longer-term
business plans and has several opportunities to question
management about those plans. For the last several years, at the
Committees January meeting, the Committee thoroughly
discusses which compensation programs, levels and goals were
effective for the performance measurement periods then recently
ended in December and which programs, levels and goals would
optimize the achievement of the Companys business plans
for future periods without introducing systemic risk driven by
compensation programs. The Committee also solicits the views of
its advisors as to whether the programs under consideration
reflect and support achievement of the Companys business
plan. Generally, at the Committees next meeting, in
February or March, the Committee authorizes compensation
programs for future periods and sets specific performance goals
for senior management in light of approved business plans. In
addition, at that time, the Committee designs compensation
programs for other members of the management group and directs
senior managers to make awards under those programs consistent
with guidelines given by the Committee. Members of executive
management, primarily the CEO, have the discretion to fashion
specific awards to key employees who are not named officers. No
compensation awards under the long-term compensation plans have
been made after the Committees February or March meeting
in which compensation programs are authorized for future
periods, as discussed above. However, awards may be made under
37
the AIP after that time and awards under the AIP can be adjusted
or pro-rated as necessary during the course of the year.
When setting compensation under the AIP and for the three-year
performance measurement periods of the longer term incentive
plans, the Committee looks to the prospective periods and does
not take into account amounts earned in prior periods. The peer
review process indicates this to be the industry practice.
Moreover, the Committee does not believe it to be in the best
interests of the Company to reduce prospective compensation
opportunities if excellent performance in past periods has
produced maximum cash awards and has caused the value of equity
awards to increase significantly from the value on date of
grant. Similarly, prospective compensation opportunities are not
increased if past periods produced lower than targeted
realizations of cash or equity awards.
Throughout the target setting and progress monitoring meetings,
the Committee provides Mercer with the opportunity to discuss
concepts without the presence of Company personnel.
Committee
Discretion
The Committee has always retained broad discretion to make
compensation awards for recruitment and retention purposes as
well as to reward extraordinary performance. The key concept in
the named officer compensation program is and has been to
provide comparatively modest compensation for average
performance but to recognize superior performance with top
quartile compensation. The Committee has the discretion to make
awards above the amounts awarded under any plan to recognize
extraordinary performance. In past years, the Committee
exercised its discretion to increase awards when circumstances
indicated it to be appropriate. The Committee did not exercise
this discretion in 2009 with regard to the named officers.
Compensation
Elements
Base
Salary
The Committee views the executive compensation program as
integrated through several levels of the Companys
management employees. Base salary for the named officers was
benchmarked using a peer group survey prepared by Mercer. The
Companys practice had been to set base compensation for
the named officers at or near the mid-point of the peer group.
However, for 2009, the Committee was advised by Mercer that base
salaries for the Companys named officers were less than
the 50th percentile of base pay for the peer group. In
light of the economic conditions, the Committee chose not to
increase base salaries to match the peer group. Instead, the
Committee chose to increase the opportunities of the named
officers to earn incentive compensation under the Companys
existing long-term incentive compensation plans, as discussed
below. See the Salary column of the Summary
Compensation Table on page 49 for more information
regarding the 2009 base salaries of the named officers.
Annual Incentive
Plan or AIP
Overview. The AIP is a cash-based, incentive bonus
plan in which approximately 350 key employees (including the
named officers) participate. Performance is measured based on a
weighted formula that takes into account operating earnings,
operating cash flow, manufacturing improvements, employee
safety, environmental compliance and responsiveness to
customers. This diverse matrix of measures allows the Committee,
for senior managers (including the named officers), and
management, for other managers, to direct attention to goals and
achievements within each participants direct control. A
prerequisite to any award under the AIP is compliance with
ATIs Corporate Guidelines for Business Conduct and
Ethics.
Performance Criteria. In considering performance
targets for the 2009 AIP, the Committee took into account the
Companys business and operations plans. Corporate wide
goals are set in a
bottom-up
process. Each operating divisions business plan and
business conditions for 2009 were separately reviewed in setting
targets, as were the expectations for manufacturing
improvements, safety and environmental improvements, and
customer responsiveness at each division. The resulting
aggregate
38
targets shown below are corporate wide and the focus for named
officer compensation. The Committee recognized that
opportunities for 2009 should allow for reasonable rewards for
meeting, and larger amounts for exceeding, the performance goals
that represented substantial challenges to AIP participants. The
Company performance goals for 2009 consisted of the following
components, weighted as indicated:
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|
AIP Goal
|
|
Weighting
|
|
Operating Earnings Achievements
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|
|
40
|
%
|
Operating Cash Flow Achievements (before capital expenditures)
|
|
|
30
|
%
|
Manufacturing Improvements
|
|
|
10
|
%
|
(Inventory Turns 5%)
(Yield Improvements 5%)
|
|
|
|
|
Safety and Environmental Compliance
|
|
|
10
|
%
|
(Lost Time Incidents 5%)
(Recordable Incidents 5%)
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|
|
|
|
Customer Responsiveness
|
|
|
10
|
%
|
(Delivery Performance 5%)
(Quality/Complaints 5%)
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|
|
|
|
The Committee selected these factors as the measurable indices
of performance.
Relative weight was assigned to reflect the interests of
stockholders, with earnings receiving the largest weighting
followed closely by internal cash generation. However, the
day-to-day
hallmarks of performance, including inventory turns, yield,
avoidance of lost time injuries, degree of safety and
environmental compliance, meeting delivery goals and absence of
customer complaints at the operating divisions are included,
since these factors can give managers indicators of problems in
a way to make timely corrections. In setting the financial goals
for these
day-to-day
measures, the Committee looks to prior years achievement
and the planned activities at a particular operating division to
set the requirements for the coming year.
For Messrs. Hassey, Harshman and Walton, attainment of the
performance goals for determining individual 2009 AIP bonuses
was based on the performance of the Company as a whole. For
Mr. Dunlap, attainment of the performance goals for
determining his 2009 AIP bonus was based 35% on the degree to
which the Company as a whole attained the foregoing
predetermined performance levels with relative weighting and 65%
on the degree to which the Companys ATI Allegheny Ludlum
business unit attained the foregoing predetermined performance
levels at the business unit level, with the same relative
weighting. Similarly, for Mr. Davis, attainment of the
performance goals for determining his 2009 AIP bonus was based
35% on the degree to which the Company as a whole attained the
foregoing predetermined performance levels and 65% on the degree
to which the Companys ATI Wah Chang business unit attained
the foregoing predetermined performance level, with the same
relative weighting. In 2009, Mr. Davis received a bonus
under the 2009 AIP of $241,301 based solely on ATI Wah Chang
performance.
Under the 2009 AIP, no payments were to be made to the named
officers if the operating earnings achieved were less than the
established minimum (threshold), notwithstanding the level of
achievement of the other performance criteria for the year. For
2009, the threshold, target and maximum targets for the
aggregate Operating Earnings Achievements and Operating Cash
Flow Achievements, as defined, were as follows
(in millions):
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|
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|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Operating Earnings Achievements (40%)
|
|
$
|
125
|
|
|
$
|
272
|
|
|
$
|
350
|
|
Operating Cash Flow Achievements (before capital expenditures)
(30%)
|
|
$
|
260
|
|
|
$
|
400
|
|
|
$
|
460
|
|
The 2009 target level of operating earnings achievement was set
to be in line with the Companys business plan as of
February 2009.
Award Opportunities. The opportunities for the
named officers under the AIP, as measured in percentages of base
pay, are set each year in connection with the review of peer
group practices. Individual AIP opportunities are granted at
Threshold, Target and
Maximum levels, which are predetermined levels of
achievement of
39
the performance goals and are expressed as a percentage of base
salary. The following table sets forth the potential awards as
percentages of base salary in effect for 2009 for each named
officer:
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|
|
|
|
|
|
|
|
|
|
|
|
Named Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
L. Patrick Hassey
|
|
|
87.5
|
%
|
|
|
175
|
%
|
|
|
350
|
%
|
Richard J. Harshman
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
200
|
%
|
Jon D. Walton
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
200
|
%
|
Terry L. Dunlap
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
160
|
%
|
Lynn D. Davis
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
160
|
%
|
Level of Difficulty. The Committee sets the
threshold, target and maximum levels for all AIP measures,
including those relating to manufacturing improvements, safety
and environmental compliance, and customer responsiveness, so
that the relative difficulty of achieving the target level is
consistent from year to year. The objective is to achieve target
on average over a period of years but to make it difficult to
achieve the maximum payout in any given year. Over the past
three years, the named officers received no AIP bonus in 2009
(with the exception of Mr. Davis), payout above target for
2008, and the maximum payout for 2007. In 2009, the Committee
acknowledged that, in hindsight, the performance thresholds were
overly ambitious given the economic crisis and Companys
performance relative to its peers.
Committee Discretion. Under the AIP, even if
the operating earnings goals are met, the Committee retains
negative discretion to reduce actual amounts payable
to each individual by up to 20% if the individual does not
achieve the other predetermined goals for that year. The
Committee also has the discretion under the AIP to pay up to an
additional 20% of an individuals calculated award as
annual bonus if the Committee determines that such additional
amounts are warranted under the circumstances, including
achieving financial performance in excess of the maximum
performance goals set for the year. No discretionary additional
amount would be performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code). The Committee did not exercise
discretion with regard to any awards under the AIP for any of
the named officers in 2009.
The
Performance/Restricted Stock Program or
PRSP
Overview. Under the PRSP, shares of
performance/restricted stock are awarded to participants. The
earnings threshold under the PRSP is set with respect to the
Companys three-year business plan. The PRSP program is
primarily designed to drive Company earnings. One-half of the
awards under the PRSP have only a performance-based vesting
feature and the other half has both performance-based and time
vesting components, as more fully described below. Approximately
100 key managers participate in this plan (including the named
officers). However, because the broader group of managers
represents the pool of talent for future management, the plan
includes the time-based vesting retention feature. Because of
its retention element, the earnings levels in this plan are not
as challenging as the earnings levels in other incentive
programs.
Performance Criteria. In February 2009, the
Committee determined that for the
2009-2011
performance measurement period:
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|
|
One-half of the stock-based award granted will vest, if at all,
only upon the Companys achievement of at least an
aggregate of $300 million in net income (determined in
accordance with U.S. generally accepted accounting
principles) for the period of January 1, 2009 through and
including December 31, 2011. If the net income target is
not reached or exceeded on or before December 31, 2011, or
if the individual leaves the employ of the Company for a reason
other than retirement, death or disability, this one-half of the
stock-based award will be forfeited.
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|
|
The other one-half of the stock-based award is traditional
restricted stock but also has a performance element. This
one-half of each award will vest upon the earlier of
(i) February 19, 2014 (if, except in the case of
retirement, death or disability, the participant is still an
employee of the Company on that date) or (ii) attainment of
the $300 million in net income performance criteria for the
January 1, 2009 through December 31, 2011 period.
|
40
|
|
|
The Committee decided to decrease the minimum amount of net
income required for vesting under the PRSP to $300 million
for the
2009-2011
measurement period from the $1.2 billion requirement in the
2008-2010
performance measurement period. The Committees decision
was motivated principally by the Companys expectations for
decreased earnings at the time of grant, due, in large part, to
weak global economic conditions.
|
Award Opportunities. The share amount of an
individuals performance/restricted stock award is
calculated as a percent of base salary, based on the average of
the high and the low trading prices of the Companys Common
Stock on the New York Stock Exchange on the date of the award,
which was $22.64 per share on February 18, 2009. Furthering
the Committees practices with respect to internal pay
equities among the named officers, the respective percentages of
base salary as set for 2009 used to determine the number of
shares of performance/restricted stock for the named officers
are as follows: Mr. Hassey, 200%, Messrs. Harshman and
Walton, 125%, and Messrs. Dunlap and Davis, 100%. Dividends
on performance/restricted stock granted in 2009 are paid in
cash. In April 2009, the Company announced that it would no
longer pay dividend equivalents on future grants of non-vested
performance stock until earned.
The Total
Shareholder Return Incentive Compensation Program or
TSRP
Overview. The TSRP is an equity-based
incentive plan in which awards are denominated in shares of
Company Common Stock and participants have an opportunity to
earn a number of shares based on a comparison of the
Companys total stockholder return (change in stock price
plus dividends paid, or TSR) for a three-year
performance measurement period, compared to the TSR for the same
performance measurement period of a peer group of companies
approved by the Committee. The target number of shares awarded
(the Opportunity Shares) is determined at the start
of the three-year performance measurement period using a per
share value equal to the average of the high and low trading
prices over the 30 trading days immediately preceding the first
day of the performance measurement period. The percentile rank
of returns on the Companys Common Stock, or TSR, compared
with actual TSR of the peer group for a three-year performance
measurement period determines the number of shares, if any,
received by the participants at the end of the period. The
purpose of this program is to focus management directly on
returns to stockholders. Approximately 50 key executives
(including the named officers) participate in this plan.
Performance Criteria. The Committee
established a new TSRP performance measurement period starting
on January 1, 2009 and ending on December 31, 2011.
Under the terms of the TSRP, the Committee selected the eligible
participants, established the Opportunity Shares for each
participant, and constructed the peer group of companies for
that performance measurement period. The peer group used for the
2009-2011
performance measurement period is set forth on page 36.
At the end of the
2009-2011
performance measurement period, participants can earn varying
percentages of their individual Opportunity Shares depending on
the percentile rank of the Companys TSR for the
performance measurement period as compared to the TSR of the
peer group for the same period. Interpolation is made between
these points on a straight line basis. Company performance below
the 25th percentile results in participants receiving no
shares for the performance measurement period.
Award Opportunities. For the
2009-2011
performance measurement period, an individuals Opportunity
Shares were calculated by dividing a predetermined percentage of
an individuals base salary for 2009 by the average high
and low trading prices of a share of Company Common Stock for
the 30 trading days preceding January 1, 2009, or $22.23.
The Opportunity Shares for each of the named officers are as
follows: Mr. Hassey, 81,871; each of Messrs. Harshman
and Walton, 24,067; Mr. Dunlap, 17,994, and Mr. Davis,
16,194.
For the
2009-2011
performance measurement period, the named officers can earn from
50% of their Opportunity Shares for Company performance at
threshold (25th percentile), to 100% of the
Opportunity Shares for Company performance at target
(50th percentile), to a maximum of 300% of the
Opportunity Shares for performance at the 90th percentile
or above, as described above. The table below sets forth for
each named officer for the
2009-2011
performance measurement period the
41
percentage of the named officers base salary used to
determine the number of shares awarded under the TSRP at various
TSR percentiles.
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Percentage of Opportunity Shares Earned at Various TSR
Percentiles
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(Maximum)
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(Threshold)
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(Target)
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90th Percentile and
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25th Percentile
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50th Percentile
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60th Percentile
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70th Percentile
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80th Percentile
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Above
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For all Named Officers
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50
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%
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100
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%
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150
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%
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200
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%
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250
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%
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300
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%
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The number of shares of Company Common Stock earned, if any, are
issued to the participants after the end of the performance
measurement period. The number of shares earned, and their
dollar value when earned, may exceed the dollar value of target
at the time of the grant because this plan increases the number
of shares that may ultimately be awarded for performance above
the target level and because performance above the target level
may contribute to a higher trading price of the Common Stock
used to calculate the awards. Similarly, depending on the
Companys performance, the number of shares ultimately
received may be less than the target level and the dollar value
of awards earned could be less than the dollar value of the
awards when granted.
The Key Executive
Performance Plan or KEPP
Overview. The KEPP is a cash-based incentive
plan with a three-year performance measurement period. Only the
members of managements executive committee (a group that
includes the named officers) are eligible to participate in this
plan. The KEPP was established by the Committee initially in
2004 in order to keep the Companys long-term incentive
programs competitive with peer companies. The overall objective
of the KEPP has been to position the Company to achieve
long-term, profitable growth. For purposes of the compensation
tables, three KEPP performance measurement periods are
applicable:
2007-2009
(KEPP IV),
2008-2010
(KEPP V), and
2009-2011
(KEPP VI).
As described below, cash targets under the KEPP are based on two
levels Level One and Level Two.
Level One uses improvement in income before taxes
(IBT) over a three-year base period to determine
achievement. Level Two awards are based on the
accomplishment of specific operational team tasks keyed to
positioning the Company for future challenges, and are subject
to the negative discretion of the Committee. No payments are
permitted under Level Two if Level One achievements
are below the threshold or at or above the maximum.
Performance Criteria. Since KEPP was adopted
in 2004, its focus has been Company earnings because
stockholders consider earnings when evaluating the
Companys performance and because earnings generate the
resources for the Company to reposition itself through capital
investment. The Level Two operational goals are developed
as a roadmap for management to use to achieve the Level One
financial goals.
For the
2007-2009
performance measurement period (KEPP IV), the focus was on
optimizing the capital assets in which the Company invested over
the recent past. The
2008-2010
performance measurement period (KEPP V) focuses on the
completion of key capital improvement projects. The
2009-2011
performance measurement period (KEPP VI) focuses on
qualifying the newly constructed capital projects for specific,
high performance applications.
For the
2007-2009
performance measurement period of KEPP IV, an aggregate of
$2.5 billion in IBT was required at threshold, and each of
the successive nine gradients requires an additional
$100 million in aggregate IBT. No additional amount is paid
for performance achieving IBT above the highest gradient.
For the
2008-2010
performance measurement period of KEPP V, an aggregate of
$3.1 billion in IBT is required at threshold, and each of
the successive nine gradients requires an additional
$100 million in aggregate IBT. No additional amount will be
paid for performance achieving IBT above the highest gradient.
Despite the Companys performance in 2008, the second best
in history, because of the aggressive target set and in view of
the difficult economic circumstances that existed in part of
2008 and all of 2009, KEPP V is not expected to pay out, nor was
any amount banked for the participants.
For the
2009-2011
performance measurement period of KEPP VI, in consideration of
the cyclicality of the Companys business, an aggregate of
$375 million in IBT is required at threshold, and each of
the
42
successive nine gradients requires an additional
$115 million in aggregate IBT. No additional amount will be
paid for performance achieving IBT above the highest gradient.
Similarly, due to the difficult economic circumstances in 2009
and aggressive targets under KEPP VI, no amount was banked for
the participants in 2009.
KEPP Level One.
Performance Criteria. Under Level One,
participants will receive cash payments if, but only if, a
predetermined level of aggregate IBT is attained or exceeded for
the applicable performance measurement period, as explained
above. Level One bonus pools increase on a graduated scale
as aggregate IBT increases through the specified gradients to a
maximum level of aggregate IBT at the highest of the ten
gradients. The Committee sets the IBT targets at levels it
believes would drive
year-over-year
earnings growth for the Company. The Committee intends for the
IBT targets for this plan to be particularly challenging, as
evidenced by the fact that no amounts were banked in 2009 for
each KEPP V and KEPP VI.
Award Opportunities. For KEPP participants,
Level One target awards are set at one times base salary
and achievement of each gradient of IBT above target increases
potential awards by one times base salary, to a maximum of ten
times base salary.
Opportunities under KEPP are scaled so that the aggregate
compensation of participants will be at or below median of the
peer group if performance is less than the threshold level of
payment, but will result in aggregate compensation to KEPP
participants at approximately the 90th percentile of the
peer group if performance is at the highest pre-set gradient.
Threshold and gradients are intended to be substantial
challenges to participants. No additional amount will be paid
for performance achieving IBT above the highest gradient.
Amounts payable under Level One are generally calculated as
follows. Once the Companys actual IBT achievement for the
applicable performance measurement period is determined, the
corresponding IBT gradient level is ascertained. Level One
payments for each participant in KEPP are the multiple of that
individuals base pay in effect at the beginning of the
three-year measurement period that corresponds to the actual IBT
gradient achieved during the three-year measurement period.
KEPP Level Two. The purpose of Level Two
is to direct the actions of the management team to perform
specific strategic actions that, if achieved, the Company
expects will result in outstanding earnings in the future,
including over the three-year period. Level Two is a
separate bonus pool that is formed if pre-set strategic action
goals are achieved and permits participants to earn awards even
if the pre-set financial goals under Level One are not
fully achieved, as long as minimum IBT levels are met. This is
due to the fact that certain goals under Level Two, by
their nature, require more than one year to implement, and
perhaps several years for it to be determined whether those
goals were achieved. The specific goal tasks under
Level Two are proprietary, but in the past have included:
acquiring assets required to penetrate predetermined niche
markets; efficiently increasing the Companys titanium
production capacity; establishing the facilities as producers of
high quality products; specific cost control measures;
increasing overseas presence and production; and other
team-oriented tasks key to the Companys long term business
plan and designed to fundamentally reposition the Company to
succeed in cyclical markets. Therefore, Level Two permits
KEPP participants to be rewarded for achieving the pre-set
operational goals even though the benefits in earnings under
Level One have been delayed. However, no Level Two
award is paid unless the Level One minimum amount in
aggregate IBT is achieved. The Level Two bonus pool,
subject to the Committees negative discretion, increases
at the same graduated scale used for Level One for the
first five gradients of aggregate IBT, and thereafter, the
Level Two bonus pool decreases on a graduated scale as
aggregate IBT increases through the gradients, so that no bonus
pool under Level Two is available at the highest gradient
of aggregate IBT. The Committee may exercise negative discretion
to reduce any awards otherwise earned under Level Two based
on the Committees evaluation of the extent to which
designated key operational objectives are achieved.
Banking Feature. The KEPP plan has a banking
feature whereby, if the actual achievement for any one or
more years exceeds the average annual targets for that year, a
KEPP payment may be reserved to be paid after the end of the
measurement period at that achievement level. All
banked amounts under the
43
KEPP are not payable until the completion of the applicable
performance measurement period and are subject to forfeiture
prior to the end of the performance measurement period if
employment is terminated for reasons other than death,
disability or retirement. Once the relevant performance
measurement period is completed, awards are paid out at the
greater of the (i) performance level at the end of the
period, or (ii) total of banked amounts for the year(s)
earned.
2007-2009
Performance. For the recently completed
2007-2009
performance measurement period, the named officers were entitled
to payment of Level One banked amounts for 2007 and 2008 at
the aggregate rate of 3.93 times based salary for each
participant, which reflected that the
2007-2009
period was the second most profitable three year period in the
Companys history. The Level One banked amounts have
been disclosed in previous proxy statements. The amounts shown
in the compensation tables are respective amounts paid under
Level Two at 3.93 times base salary for achievement of the
specific team goals for the
2007-2009
performance measurement period, which included diversification
of the cold-rolled stainless sheet coil business, increased
delivery quantities under certain supply contracts, completion
and start up of two key capital projects, maintaining the fully
funded position of the Companys pension plan, regaining an
investment grade credit rating, and refinancing the
then-outstanding debt obligations.
Employment
Contracts and Change in Control Agreements
For retention purposes, the Committee has authorized two
employment contracts and double trigger change in control
severance agreements, all of which reflect competitive practices
as advised by Mercer.
The two employment agreements to which the Company is a party
consist of a three-year evergreened agreement with
Mr. Hassey that was entered into when Mr. Hassey was
recruited in 2003 and a one-year evergreened agreement with
Mr. Walton that was entered into in 1996 when Allegheny
Ludlum Corporation and Teledyne, Inc. combined.
The Company has entered into a change in control agreement with
each of the named officers except for Mr. Hassey. The
change in control agreements are intended to better enable the
Company to retain the named officers in the event that the
Company is the subject of a potential change in control
transaction. Based on past advice from the compensation
consultant, the Committee believes that the potential payments
under the change in control agreements are, individually and in
the aggregate, in line with competitive practices. The Committee
takes the value of these contracts, as well as the qualified and
non-qualified plans discussed below, into account when setting
named officer compensation.
For a more detailed discussion of these agreements, see the
Employment and Change in Control Agreements section
of this Proxy Statement.
Other
Compensation Policies
Adherence to
Ethical Standards; Clawbacks
The payment of awards under the AIP is conditioned on adherence
to the Companys Corporate Guidelines for Business
Conduct and Ethics. Furthermore, the Committee has included
clawback provisions in each compensation program that require
participants in plans to return compensation to the extent that
earnings or other performance measures are improperly reported.
Pension
Plans
The Company also sponsors a number of defined contribution and,
for some executives who were employees of Allegheny Ludlum
Corporation or Teledyne, Inc. prior to the 1996 combination
(which includes all of the named officers except for
Mr. Hassey), defined benefit retirement arrangements that
include non-qualified programs compliant with Section 409A
of the Code and aimed at restoring the effects of limitations
imposed by the Code. The benefits payable under these programs
are more modest than the benefits payable under restoration
plans sponsored by other manufacturing companies, in large part
because accruals for former Teledyne, Inc. employees under the
applicable qualified defined benefit plan have been curtailed
and because the defined benefit plan for former Allegheny Ludlum
Corporation employees was frozen in 1988. The Company does
sponsor a Supplemental Pension Plan covering certain
corporate officers, including all of our named officers except
for Mr. Dunlap and Mr. Davis, as a
44
non-qualified plan that pays one half of the individuals
salary at retirement to the executive (or spouse) for ten years
after retirement at age 62 or at or after age 58 with
the consent of the Company. The Company maintains these programs
in order to offer competitive compensation and as retention
devices. For more information regarding the pension plans of the
named officers, see the Pension Benefits table and accompanying
narrative beginning on page 53.
No Stock
Options
The Committee ceased awarding stock options to employees as a
matter of policy after 2003 and to directors after 2006. Some
stock options granted before that time remain outstanding as
reported elsewhere in this Proxy Statement. The Committee
retains discretion to award stock options to employees but there
is no present intent to do so, except possibly in recruitment or
retention situations. At the time that the Committee ceased
awarding stock options, it chose to implement the PRSP for a
smaller, more senior group of managers (including all of the
named officers) than the group previously considered for option
awards. The Committees view was that the PRSP, by putting
half of each award at risk for performance for the
limited group of employees, would more efficiently provide a
strong performance incentive to the management employees more
able to influence corporate earnings and goal achievement.
Perquisites
The Company provides a limited number of perquisites, having
eliminated the use of automobiles and reimbursement for country
club memberships several years ago. In the process of recruiting
Mr. Hassey in 2003, the Company agreed to accommodate his
request that he be able to avoid relocating his family from its
Salt Lake City residence. In order to do so, Mr. Hassey
periodically uses Company leased aircraft so that he can
maintain a full schedule with the Company. In April 2009, the
Company announced that it would no longer provide
gross-ups to
its executives relating to personal air travel. For more
information regarding the perquisites of the named officers,
please see the All Other Compensation column of the
Summary Compensation Table beginning on page 49.
Federal Income
Taxes/Tax Deductibility
The Committee has intended that the compensation programs be
performance-based within the meaning of Section 162(m) of
the Code. All compensation earned under these programs is
intended to be deductible by the Company for federal income tax
purposes. The Committee retains discretion to adjust
compensation paid under these programs to recognize
extraordinary performance. If that discretion is exercised,
upward adjustments may not be deductible for federal income tax
purposes.
Stock Ownership
Guidelines
The Company has stock ownership guidelines for its officers,
including all of the named officers. The guidelines call for a
minimum level of stock ownership based on the executives
base salary, which is designed to further link these
executives interests to increased stockholder value, as
follows: Chief Executive Officer, three times base salary;
Executive Officers, two times base salary; and Vice Presidents,
one times base salary. The executives are required to have
achieved the target ownership levels before September 2008 or
five years from the date executives employment began,
whichever is later. All of the named individuals met these
guidelines during 2009. The Company also has stock ownership
guidelines for its non-employee directors, which are discussed
in the Director Compensation section of this Proxy
Statement.
Mix
of Compensation Components
The Committee believes that it strikes an appropriate balance
for named officers between cash and stock compensation
opportunities and between one year and longer term
opportunities. At target levels of awards, based on stock
trading values when the award is made, approximately 45% of
compensation opportunities for executive officers are payable in
cash (base pay, AIP and KEPP) and 55% is payable in stock (PRSP
and TSRP). The Committee believes that the balance between one
year and longer term
45
compensation achieves consistency in goal setting that considers
both the short term results and building a platform for future
profitable growth. The Committee also believes that this cash
and equity compensation ratio, along with the stock ownership
guidelines for executives, focuses managements attention
on the interests of stockholders and encourages executives to
retain shares of stock. It is expected that the Committee will
strive to retain these general ratios. In addition, the
Committee believes that the complementary but diverse goals,
overlapping performance measurement periods, and balance of
payment forms serve to substantially reduce the possibility that
the compensation process could provide incentive to undertake
imprudent risk.
In late 2009, the Committee recognized the potential retention
issues raised by the combination of aggressive target setting in
the Companys incentive plans and the unforeseeable depth
of the ongoing recession. The Committee adopted the Performance
Equity Payment Program (PEPP) for the calendar years
2010-2012
that would pay to each of the seven participants, being members
of managements executive committee (a group that includes
the named officers), an annual amount for each of the calendar
years 2010, 2011 and 2012 in shares of Company Common Stock (in
the cases of Messrs. Hassey and Walton, one half in stock
and one half in cash) equal to their respective annual base
salaries for that calendar year, if a preset earnings target for
that calendar year is achieved and the individual is an employee
of the Company on the last business day of the calendar year.
The calendar year measurement period began on January 1,
2010. No amounts have been earned or paid under the PEPP and
therefore there are no amounts shown in compensation tables
relating to the PEPP.
The Committee believes it utilizes an optimal allocation between
guaranteed and at risk named officer compensation.
The graph below illustrates the at risk percentage
of actual compensation for Mr. Hassey and each of the other
named individuals for the period 2007 through 2009, which the
Committee understands is a higher at risk percentage
than exhibited in the comparable group:
For the purposes of this graph, total compensation for each year
in the three-year period is base compensation and AIP earned in
the year and PRSP, TSRP and KEPP awards paid for the measurement
periods ending on the last day of the year. Stock values for
PRSP and TSRP are measured as of the date the award was paid to
the executives.
Analysis
of 2009 Compensation Decisions
The net result of the Committees compensation actions with
respect to the named officers for 2009 was to maintain the
weight of base pay relative to the sum of base pay and target
incentive opportunities of approximately 13% for
Mr. Hassey, 18% for Messrs. Harshman and Walton, and
21% for Messrs. Dunlap and Davis (using the same stock
price at the end of the period as used to denominate the
awards). The Committee was advised by Mercer that base salaries
for the Companys named officers for 2009 were below the
50th percentile of base pay for the peer group. The
Committee chose to not increase base pay and the high degree of
leverage on the incentive compensation so that if target levels
of performance under the AIP, PRSP and TSRP were achieved (using
the same stock price at the
46
end of the period as used to denominate the awards), the
aggregate compensation paid to the named officers would
approximate the 75th percentile of the peer group. If the
target level of performance is reached under the KEPP, the
aggregate compensation for named officers is expected to exceed
the 90th percentile for the
2009-2011
performance measurement period.
The Committee believes that these comparatively high opportunity
levels are justified not only by the relative weighting of
incentive to guaranteed compensation, but also by the aggressive
target performance levels set by the Committee. The Committee
believes that the target requirements are significant challenges
to management. If achieved, the rewards to management would be
relatively high as compared to the peer group, but the Company
will have been positioned for continued profitable growth with
enhanced titanium sponge, titanium melt, nickel-based superalloy
melt, and finishing capabilities, quality qualification of
facilities, and improvements in its other businesses. Mercer
advised the Committee that the performance requirements set by
the Committee are at growth levels that exceed the average of
the growth levels of other members of the peer group.
At its December 2009 and January 2010 meetings, in connection
with the review and approval of payouts for the
2007-2009
performance measurement period, the Committee discussed the fact
that the fourth quarter of 2008 and the full year 2009 showed
weakness for the Companys performance and the economy as a
whole. The Committee was also advised that, notwithstanding that
the
2007-2009
performance measurement period was the second most profitable
period in the Companys history, no AIP was earned for
2009, and the incentive payments for the then closing three-year
measurement periods under the long-term incentive compensation
plans were resulting in named officer compensation below the
median targeted when the compensation programs were adopted.
Nonetheless, the Committee chose not to grant compensation in
addition to that earned under the performance goals set prior to
the onset of the recession. In this regard, the Committee
determined that it is important to reemphasize and maintain its
pay for performance philosophy notwithstanding adverse economic
conditions, and concluded that the actual amounts earned are
appropriate under the Companys compensation programs as
designed. As noted above, the Committee addressed the potential
retention issues raised by developing the PEPP, which serves as
an additional incentive opportunity with retention features.
Compensation
Committee Report
The Personnel and Compensation Committee (referred to in this
Report as the Committee) has reviewed and discussed
the preceding Compensation Discussion and Analysis with Company
management. Based on such review and discussion, the Committee
recommends to the Board of Directors that the Compensation
Discussion and Analysis be included in the Companys 2010
Proxy Statement. The Committee furnishes this Report for
inclusion in the 2010 Proxy Statement and recommends its
inclusion in the Companys Annual Report on
Form 10-K.
Submitted by:
PERSONNEL AND COMPENSATION COMMITTEE,
whose members are:
James E. Rohr, Chairman
Diane C. Creel
J. Brett Harvey
47
Five-Year
Total Stockholder Return
The following graph shows the cumulative total stockholder
return (i.e., price change plus reinvestment of dividends)
(TSR) on our Common Stock for the five years ended
December 31, 2009, as compared to the S&P 500 Index
and a peer group of companies. We believe the peer group of
companies is representative of companies in our industry that
serve similar markets during the applicable periods. The total
stockholder return for the peer group is weighted according to
the respective issuers stock market capitalization at the
beginning of each period. The graph assumes that $100 was
invested on December 31, 2004.
Please see the information under the caption Compensation
Discussion and Analysis Peer Group and
Benchmarking on page 36 of this Proxy Statement for a
discussion of the peer group for 2009.
COMPARISON OF
CUMULATIVE FIVE YEAR TOTAL RETURN
48
Summary
Compensation Table for 2009
The following Summary Compensation Table sets forth information
about the compensation paid by the Company to the Chief
Executive Officer, the Chief Financial Officer and to each of
the other three most highly compensated executives required to
file reports under Section 16 of the Securities Exchange
Act of 1934, as of December 31, 2009 (the named
officers).
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Change in
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Pension
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Value and
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Non-Qualified
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Non-Equity
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Deferred
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Name and
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Principal
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Position
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Year
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($)
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($)(1)
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($)(2)
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($)
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($)(3)
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($)(4)
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($)(5)
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($)
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L. Patrick Hassey
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2009
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910,000
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0
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5,205,291
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0
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3,481,000
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352,744
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493,070
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10,442,105
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Chairman, President and
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2008
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907,917
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0
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4,377,531
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0
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5,514,208
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367,554
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750,291
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11,917,501
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Chief Executive Officer
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2007
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880,042
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323,886
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5,488,321
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0
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17,959,447
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639,524
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576,774
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25,867,994
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Richard J. Harshman
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2009
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428,000
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0
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|
|
|
1,530,152
|
|
|
|
0
|
|
|
|
1,636,267
|
|
|
|
664,214
|
|
|
|
140,810
|
|
|
|
4,399,443
|
|
Executive Vice
|
|
|
2008
|
|
|
|
427,000
|
|
|
|
0
|
|
|
|
1,286,795
|
|
|
|
0
|
|
|
|
2,160,733
|
|
|
|
(77,209
|
)
|
|
|
170,847
|
|
|
|
3,968,166
|
|
President, Finance and
|
|
|
2007
|
|
|
|
413,733
|
|
|
|
12,582
|
|
|
|
1,612,826
|
|
|
|
0
|
|
|
|
7,707,418
|
|
|
|
669,873
|
|
|
|
137,669
|
|
|
|
10,554,101
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon D. Walton
|
|
|
2009
|
|
|
|
428,000
|
|
|
|
0
|
|
|
|
1,530,152
|
|
|
|
0
|
|
|
|
1,636,267
|
|
|
|
203,648
|
|
|
|
152,658
|
|
|
|
3,950,725
|
|
Executive Vice President,
|
|
|
2008
|
|
|
|
427,000
|
|
|
|
0
|
|
|
|
1,286,795
|
|
|
|
0
|
|
|
|
2,160,733
|
|
|
|
62,803
|
|
|
|
180,602
|
|
|
|
4,117,933
|
|
Human Resources, Chief
|
|
|
2007
|
|
|
|
413,733
|
|
|
|
12,582
|
|
|
|
1,612,826
|
|
|
|
0
|
|
|
|
7,707,418
|
|
|
|
61,616
|
|
|
|
147,910
|
|
|
|
9,956,085
|
|
Legal and Compliance Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry L. Dunlap
|
|
|
2009
|
|
|
|
400,000
|
|
|
|
0
|
|
|
|
1,144,038
|
|
|
|
0
|
|
|
|
1,475,000
|
|
|
|
3,414
|
|
|
|
90,512
|
|
|
|
3,112,964
|
|
Group President, ATI
|
|
|
2008
|
|
|
|
386,667
|
|
|
|
0
|
|
|
|
926,015
|
|
|
|
0
|
|
|
|
1,658,803
|
|
|
|
(435
|
)
|
|
|
123,170
|
|
|
|
3,094,220
|
|
Flat-Rolled Products and ATI
|
|
|
2007
|
|
|
|
366,500
|
|
|
|
48,400
|
|
|
|
1,163,191
|
|
|
|
0
|
|
|
|
6,568,267
|
|
|
|
(279
|
)
|
|
|
109,280
|
|
|
|
8,255,359
|
|
Allegheny Ludlum Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lynn D. Davis
|
|
|
2009
|
|
|
|
360,000
|
|
|
|
0
|
|
|
|
1,029,605
|
|
|
|
0
|
|
|
|
1,421,301
|
|
|
|
926,126
|
|
|
|
28,152
|
|
|
|
3,765,184
|
|
Group President, ATI Primary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals and Exotic Alloys
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Discretionary cash bonuses.
|
|
(2) |
|
The values set forth in this column
are based on the aggregate grant date fair value, determined in
accordance with FASB ASC Topic 718, of PRSP awards and awards
under the Companys TSRP, and include PRSP and TSRP awards
made in 2009, 2008 and 2007, for the applicable year shown in
the table above, each of which has a three-year performance
measurement period. Grant date fair values of PRSP and TSRP
awards are calculated based on the probable outcome of the
related performance conditions to which the awards are subject,
as applicable. If maximum performance were to be achieved, the
2009 amounts for each named officer would be as follows:
Mr. Hassey, $7,380,685; each of Messrs. Harshman and
Walton, $2,169,637; Mr. Dunlap, $1,622,156; and
Mr. Davis, $1,459,895.
|
|
|
|
The fair value of nonvested
performance/restricted stock awards is measured based on the
stock price at the grant date, adjusted for non-participating
dividends, as applicable, based on the current dividend rate.
For nonvested stock awards to employees in 2009, 2008 and 2007,
one-half of the nonvested stock (performance shares)
vests only on the attainment of an income target measured over a
cumulative three-year period. The remaining nonvested stock
awarded to employees vests over a service period of five years,
with accelerated vesting to three years if the performance
shares vesting criterion is attained. For the 2009 PRSP
awards, the values were calculated using the average of the high
and low trading prices of the Companys Common Stock on
February 18, 2009, the date of grant, of $22.64.
|
|
|
|
Fair values for the TSRP awards at
target were estimated using Monte Carlo simulations of stock
price correlation, projected dividend yields and other variables
over three-year time horizons matching the TSRP performance
periods.
|
|
|
|
A discussion of the relevant
assumptions made in the valuations may be found in Note 11
to the financial statements in the Companys Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2009.
|
|
(3) |
|
Consists of performance-based (and
not discretionary) cash awards earned for the years indicated
under the AIP and the KEPP, respectively, as follows. The
amounts set forth below for the
2007-2009
KEPP represents awards under Level Two. The amounts, if
any, set forth below for the
2008-2010
KEPP and
2009-2011
KEPP are the banked amounts earned under ongoing
KEPP plans (for the
2008-2010
and
2009-2011
performance measurement periods) based on 2009 performance.
Amounts banked under the
2007-2009
KEPP based on performance in 2008 and 2007 were reported in the
prior respective years and are included in the Summary
Compensation Table above.
|
49
|
|
|
|
|
Banked amounts under
the KEPP are not payable until the completion of each
KEPPs performance measurement period and are subject to
forfeiture prior to the end of the performance measurement
period if employment is terminated for reasons other than death,
disability or retirement. Once the relevant performance
measurement period is completed, awards are paid out at the
greater of the (i) performance level at the end of the
period, or (ii) total of banked amounts for the first two
years earned.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2007-2009
|
|
|
2008-2010
|
|
|
2009-2011
|
|
|
|
AIP
|
|
|
KEPP
|
|
|
KEPP
|
|
|
KEPP
|
|
|
|
|
L. P. Hassey
|
|
$
|
0
|
|
|
$
|
3,481,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
R. J. Harshman
|
|
$
|
0
|
|
|
$
|
1,636,267
|
|
|
$
|
0
|
|
|
$
|
0
|
|
J. D. Walton
|
|
$
|
0
|
|
|
$
|
1,636,267
|
|
|
$
|
0
|
|
|
$
|
0
|
|
T. L. Dunlap
|
|
$
|
0
|
|
|
$
|
1,475,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
L. D. Davis
|
|
$
|
241,301
|
|
|
$
|
1,180,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
(4) |
|
The amounts in this column include
amounts that are not vested and may not ultimately be received
by the named officer. The amounts reflect the actuarial change
in the present value of the named officers benefits under
all defined benefit pension plans and defined contribution plans
(both qualified and non-qualified) established by the Company
determined using interest rate and mortality rate assumptions
consistent with those used in the Companys financial
statements.
|
|
(5) |
|
Other amounts in the All
Other Compensation Column include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
made by the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) and
|
|
|
|
|
|
Dividends on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
Nonvested
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
|
Defined
|
|
|
|
|
|
Performance/
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
Restoration
|
|
|
Contribution
|
|
|
Insurance
|
|
|
Restricted
|
|
|
City Club
|
|
|
|
|
|
|
Reimbursements
|
|
|
Plan
|
|
|
Plans
|
|
|
Premiums
|
|
|
Stock
|
|
|
Membership
|
|
|
Parking
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
L. P. Hassey
|
|
|
15,445
|
**
|
|
|
266,513
|
|
|
|
24,695
|
|
|
|
14,014
|
|
|
|
82,494
|
|
|
|
3,675
|
|
|
|
1,176
|
|
R. J. Harshman
|
|
|
3,354
|
*
|
|
|
81,434
|
|
|
|
24,695
|
|
|
|
2,225
|
|
|
|
24,251
|
|
|
|
3,675
|
|
|
|
1,176
|
|
J. D. Walton
|
|
|
3,354
|
*
|
|
|
81,434
|
|
|
|
24,695
|
|
|
|
12,283
|
|
|
|
24,251
|
|
|
|
3,675
|
|
|
|
1,176
|
|
T. L. Dunlap
|
|
|
0
|
|
|
|
45,874
|
|
|
|
24,695
|
|
|
|
2,010
|
|
|
|
17,933
|
|
|
|
0
|
|
|
|
0
|
|
L. D. Davis
|
|
|
0
|
|
|
|
0
|
|
|
|
10,150
|
|
|
|
2,384
|
|
|
|
15,618
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
**
|
|
For air travel (in the amount of
$12,123), city club membership and parking.
|
|
|
|
*
|
|
For city club membership and
parking.
|
|
|
|
|
|
Mr. Hassey and Mr. Walton
also received perquisites and personal benefits in 2009 of
$85,058 and $1,790, respectively, for air travel. The values of
any perquisites, including personal travel amounts, are
calculated based on the aggregate incremental cost to the
Company. Amounts relating to air travel are calculated based on
the variable costs of hourly and fuel surcharges and excise
taxes paid by the Company for the leased aircraft used. Fixed
costs are not included. In the process of recruiting
Mr. Hassey in 2003, the Company agreed to accommodate his
request that he be able to avoid relocating his family from its
Salt Lake City, Utah residence. In order to do so,
Mr. Hassey periodically uses Company leased aircraft to
travel to and from Mr. Hasseys family home in Salt
Lake City so that he can maintain a full schedule with the
Company. Mr. Hasseys use of Company leased aircraft
for these purposes is a provision of Mr. Hasseys
employment agreement with the Company. Also, the Personnel and
Compensation Committee has required Mr. Hassey to use
Company leased aircraft for the Companys benefit.
|
|
|
|
In April 2009, the Company
announced that it would no longer provide executives with income
tax
gross-ups
for air travel and would discontinue paying dividend equivalents
on future grants of non-vested performance stock until the
amounts are earned.
|
|
|
|
Under the non-qualified defined
contribution portion of the ATI Benefit Restoration Plan, the
Company supplements payments received by participants under the
Companys defined contribution plan by accruing benefits on
behalf of participants in amounts that are equivalent to the
portion of the formula contributions or benefits that cannot be
made under such plan due to limitations imposed by the Code. See
also the narrative discussion following the Non-Qualified
Deferred Compensation Table.
|
|
|
|
Quarterly dividends paid on shares
of performance/restricted stock are paid either in cash or in
stock, and in which case are based on average of the high and
low of the
intra-day
price of the shares on the applicable dividend payment date. The
price used to reinvest shares, and the mechanism and manner in
which the dividends are reinvested, are consistent with the
Companys dividend reinvestment plan.
|
50
Grants
of Plan-Based Awards for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Estimated
|
|
All Other
|
|
Awards:
|
|
Exercise
|
|
|
|
|
|
|
|
|
Possible Payouts
|
|
Future Payouts
|
|
Stock
|
|
Number of
|
|
Or Base
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
Awards:
|
|
Securities
|
|
Price of
|
|
Fair Value of
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
Incentive Plan Awards
|
|
Number
|
|
Underlying
|
|
Option
|
|
Plan-Based
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
of Shares
|
|
Options
|
|
Awards
|
|
Equity
|
Name
|
|
Description(1)
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
of Stock (#)
|
|
(#)
|
|
($/sh)
|
|
Awards
($)(2)
|
|
|
L. P. Hassey
|
|
|
AIP
|
|
|
|
|
|
|
|
796,250
|
|
|
|
1,592,500
|
|
|
|
3,185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,195
|
|
|
|
80,389
|
|
|
|
80,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,820,007
|
|
|
|
|
TSRP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,936
|
|
|
|
81,871
|
|
|
|
245,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,385,284
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
910,000
|
|
|
|
910,000
|
|
|
|
9,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
1,706,250
|
|
|
|
2,502,200
|
|
|
|
12,285,000
|
|
|
|
81,131
|
|
|
|
162,260
|
|
|
|
326,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,205,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Harshman
|
|
|
AIP
|
|
|
|
|
|
|
|
214,000
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,816
|
|
|
|
23,631
|
|
|
|
23,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535,006
|
|
|
|
|
TSRP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,034
|
|
|
|
24,067
|
|
|
|
72,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995,146
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
428,000
|
|
|
|
428,000
|
|
|
|
4,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
642,000
|
|
|
|
856,000
|
|
|
|
5,136,000
|
|
|
|
23,850
|
|
|
|
47,698
|
|
|
|
95,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,530,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.D. Walton
|
|
|
AIP
|
|
|
|
|
|
|
|
214,000
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,816
|
|
|
|
23,631
|
|
|
|
23,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535,006
|
|
|
|
|
TSRP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,034
|
|
|
|
24,067
|
|
|
|
72,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995,146
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
428,000
|
|
|
|
428,000
|
|
|
|
4,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
624,000
|
|
|
|
856,000
|
|
|
|
5,136,000
|
|
|
|
23,850
|
|
|
|
47,698
|
|
|
|
95,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,530,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. L. Dunlap
|
|
|
AIP
|
|
|
|
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,834
|
|
|
|
17,668
|
|
|
|
17,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,004
|
|
|
|
|
TSRP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,997
|
|
|
|
17,994
|
|
|
|
53,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
744,034
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
385,000
|
|
|
|
385,000
|
|
|
|
3,850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
545,000
|
|
|
|
705,000
|
|
|
|
4,490,000
|
|
|
|
17,831
|
|
|
|
35,662
|
|
|
|
71,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,144,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. D. Davis
|
|
|
AIP
|
|
|
|
|
|
|
|
144,000
|
|
|
|
288,000
|
|
|
|
576,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,951
|
|
|
|
15,901
|
|
|
|
15,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
359,999
|
|
|
|
|
TSRP
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,097
|
|
|
|
16,194
|
|
|
|
48,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
669,606
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
308,000
|
|
|
|
308,000
|
|
|
|
3,080,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
452,000
|
|
|
|
596,000
|
|
|
|
3,656,000
|
|
|
|
16,048
|
|
|
|
32,095
|
|
|
|
64,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,029,605
|
|
|
|
|
|
(1) |
|
Represents the Companys
Annual Incentive Plan (AIP), Performance/Restricted Stock
Program (PRSP), Total Shareholder Return Incentive Compensation
Program (TSRP) and Key Executive Performance Plan (KEPP).
|
|
(2) |
|
The values set forth in this column
are based on the aggregate grant date fair value of awards
determined in accordance with FASB ASC Topic 718 and correspond
to the aggregate values disclosed in the 2009 Stock
Awards column in the Summary Compensation Table. For the
PSRP nonvested stock award, one-half of the award
(performance shares) vests only on the attainment of
an income target measured over a cumulative three-year period.
The fair value of PSRP nonvested stock award as presented above
is measured based on the stock price at the grant date, with the
assumption that the performance criteria will be achieved. The
remaining nonvested PRSP stock awarded to employees vests over a
service period of five years, with accelerated vesting to three
years if the performance shares vesting criterion is
attained. Fair value for the TSRP award was estimated using
Monte Carlo simulations of stock price correlation, projected
dividend yields and other variables over a three-year time
horizon matching the TSRP performance period. A discussion of
the relevant assumptions made in the valuations may be found in
Note 11 to the financial statements in the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
|
For the
2009-2011
performance measurement period, the payment to continuing KEPP
participants for threshold performance is approximately 1.68% of
the amount of income before taxes for each of Level One and
Level Two, and the payment opportunities increase to
approximately 2.23% of the designated amount of income before
taxes for Level One and for Level Two at the highest
gradient. No compensation is paid for performance in excess of
the highest gradient.
For KEPP, gradients among participants are a direct function of
base salary at each gradient. The CEOs percentage of the
potential pools for
2009-2011 is
approximately 29%.
51
Outstanding
Equity Awards at 2009 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Number of
|
|
or Payout
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Unearned
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Shares,
|
|
Unearned
|
|
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Units or
|
|
Shares,
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Other
|
|
Units or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Stock that
|
|
Stock that
|
|
Rights that
|
|
Other Rights
|
|
|
|
|
Options
|
|
Options
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
that Have Not
|
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Grant Date
|
|
(#)(1)(2)
|
|
(#)(1)
|
|
Options (#)
|
|
($)
|
|
Date
|
|
(#)(1)(3)
|
|
($)(4)
|
|
(#)(1)
|
|
($)(4)
|
|
|
L. P. Hassey
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,776
|
|
|
|
482,442
|
|
|
|
10,776
|
(5)
|
|
|
482,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,982
|
(6)
|
|
|
894,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,195
|
|
|
|
1,799,530
|
|
|
|
40,194
|
(5)
|
|
|
1,799,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,613
|
(6)
|
|
|
10,996,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. J. Harshman
|
|
|
1/24/2003
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.70
|
|
|
|
1/24/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2003
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.63
|
|
|
|
2/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
|
141,831
|
|
|
|
3,167
|
(5)
|
|
|
141,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,874
|
(6)
|
|
|
262,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,816
|
|
|
|
529,002
|
|
|
|
11,815
|
(5)
|
|
|
528,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,201
|
(6)
|
|
|
3,232,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. D. Walton
|
|
|
1/24/2003
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.70
|
|
|
|
1/24/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2003
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.63
|
|
|
|
2/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
|
141,831
|
|
|
|
3,167
|
(5)
|
|
|
141,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,874
|
(6)
|
|
|
262,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,816
|
|
|
|
529,002
|
|
|
|
11,815
|
(5)
|
|
|
528,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,201
|
(6)
|
|
|
3,232,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. L. Dunlap
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,280
|
|
|
|
102,076
|
|
|
|
2,279
|
(5)
|
|
|
102,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,227
|
(6)
|
|
|
189,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,834
|
|
|
|
395,498
|
|
|
|
8,834
|
(5)
|
|
|
395,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,982
|
(6)
|
|
|
2,416,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. D. Davis
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,824
|
|
|
|
81,660
|
|
|
|
1,823
|
(5)
|
|
|
81,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,381
|
(6)
|
|
|
151,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,951
|
|
|
|
355,966
|
|
|
|
7,950
|
(5)
|
|
|
355,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/18/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,582
|
(6)
|
|
|
2,175,016
|
|
|
|
|
|
(1)
|
|
This table relates to vested but
unexercised options to purchase Company Common Stock outstanding
as of December 31, 2009 and shares of
performance/restricted stock and awards under the TSRP that have
not vested for performance measurement periods ending in 2010
and 2011.
|
|
(2)
|
|
Stock options awarded to named
officers vested in equal amounts annually over three years from
their respective dates of grant.
|
|
(3)
|
|
Consists of shares of time-based
restricted stock under the PRSP. The number of shares reported
in this column represents the number of shares that would be
awarded pursuant to the time-based vesting portion of the PRSP
for the
2008-2010
and
2009-2011
measurement periods. Such shares may vest earlier upon the
Companys achievement of certain levels of net income
during the applicable performance measurement period.
|
|
(4)
|
|
Amounts were calculated using
$44.77 per share, the closing price of Company Common Stock at
December 31, 2009.
|
|
(5)
|
|
Consists of shares of
performance-based restricted stock under the PRSP. The number of
shares reported represents the number of shares that would be
awarded if the applicable performance measure under the PRSP for
the
2008-2010
and
2009-2011
performance measurement periods are met at the end of the
applicable performance measurement periods. It is not expected
that the performance criteria for the
2008-2010
PRSP grant will be achieved.
|
|
(6)
|
|
Represents the number of shares
that would be awarded if the next higher performance measure was
achieved under the TSRP. In accordance with applicable SEC rules
and interpretations, for the
2008-2010
performance measurement period, performance is disclosed at
target because performance under the TSRP for the portion of the
award period ended December 31, 2009 exceeded the threshold
level but was less than the target level. For the
2009-2011
performance measurement period, performance is disclosed at
maximum because performance under the TSRP for the portion of
the award period ended December 31, 2009 exceeded the
target level.
|
52
Option
Exercises and Stock Vested for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
($)
|
|
|
(#)(1)
|
|
|
($)(2)
|
|
|
|
|
L. P. Hassey
|
|
0
|
|
|
0
|
|
|
|
34,077
|
|
|
|
1,333,091
|
|
R. J. Harshman
|
|
0
|
|
|
0
|
|
|
|
10,016
|
|
|
|
391,809
|
|
J. D. Walton
|
|
0
|
|
|
0
|
|
|
|
10,016
|
|
|
|
391,809
|
|
T. L. Dunlap
|
|
0
|
|
|
0
|
|
|
|
7,224
|
|
|
|
282,591
|
|
L. D. Davis
|
|
0
|
|
|
0
|
|
|
|
5,779
|
|
|
|
226,067
|
|
|
|
|
|
(1) |
|
Consists of shares of
performance/restricted stock awarded on February 21, 2007
pursuant to the PRSP and shares awarded based on performance
pursuant to the TSRP at the 86th percentile in the following
amounts, respectively, for the named officers: Mr. Hassey,
16,845 and 17,232; each of Messrs. Harshman and Walton,
4,954 and 5,062; Mr. Dunlap, 3,573 and 3,651; and
Mr. Davis, 2,858 and 2,921.
|
|
(2) |
|
For PRSP awards, amounts were
calculated using $36.23 per share, which was the average of the
high and low trading prices of Company Common Stock on
December 11, 2009, the day of the award payment date. For
TSRP awards, amounts were calculated using $41.95 per share,
which was the average of the high and low trading prices of
Company Common Stock on January 29, 2010, the business day
prior to the award payment date.
|
Pension
Benefits for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
|
|
|
Present
|
|
During
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Last
|
|
|
|
|
|
|
Years Credited
|
|
Accumulated
|
|
Fiscal
|
|
|
|
|
|
|
Service
|
|
Benefit
|
|
Year
|
|
|
Name
|
|
Plan Name
|
|
(#)(1)
|
|
($)(2)
|
|
($)
|
|
|
|
|
L. P. Hassey
|
|
Supplemental Pension Plan
|
|
|
6
|
|
|
|
2,364,732
|
|
|
|
0
|
|
|
|
|
|
R. J. Harshman
|
|
ATI Pension Plan
|
|
|
28
|
|
|
|
762,346
|
|
|
|
0
|
|
|
|
|
|
|
|
ATI Benefit Restoration Plan
|
|
|
21
|
|
|
|
1,144,920
|
|
|
|
0
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
9
|
|
|
|
945,133
|
|
|
|
0
|
|
|
|
|
|
J. D. Walton
|
|
ATI Pension Plan
|
|
|
20
|
|
|
|
1,454,431
|
|
|
|
0
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
24
|
|
|
|
1,834,510
|
|
|
|
0
|
|
|
|
|
|
T. L. Dunlap
|
|
ATI Pension Plan
|
|
|
5
|
|
|
|
22,802
|
|
|
|
0
|
|
|
|
|
|
L. D. Davis
|
|
ATI Pension Plan
|
|
|
33
|
|
|
|
934,748
|
|
|
|
0
|
|
|
|
|
|
|
|
ATI Benefit Restoration Plan
|
|
|
33
|
|
|
|
2,384,879
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
(1) |
|
Years of credited service reflect
the number of years of service used for determining benefits for
each individual during their participation under the respective
plans.
|
|
(2)
|
|
The present value of accumulated
benefit as of December 31, 2009 is computed using the
relevant actuarial assumptions consistent with those used to
value the Companys defined benefit pension plans in the
Companys 2009 audited financial statements.
|
ATI Pension
Plan
The Company maintains a qualified defined benefit pension plan,
called the Allegheny Technologies Incorporated Pension Plan
(ATI Pension Plan), which has a number of benefit
formulas that apply separately to various groups of employees
and retirees. In general, the variances among formulas are
determined by work location and job classification. A principal
determinant is whether an employee was employed by Allegheny
Ludlum Corporation (Allegheny Ludlum), as in the
case of Messrs. Walton and Dunlap, or by Teledyne, Inc.
(TDY), as in the case of Messrs. Harshman and
Davis, in 1996 when those corporations were combined to form the
Company. Mr. Hassey does not participate in the ATI Pension
Plan under any formula.
Allegheny Ludlum ceased pension accruals under its pension
formula in 1988, except for employees who then met certain age
and service criteria. Mr. Walton and Mr. Dunlap have
modest frozen benefits under the Allegheny Ludlum formula.
53
Both the Allegheny Ludlum formula and the TDY formula multiply
years of service by compensation and then by a factor to produce
a benefit which, in turn, is reduced with respect to Social
Security amounts payable to determine a monthly amount payable
as a straight life annuity. Participants can choose alternate
benefit forms, including survivor benefits. The Allegheny Ludlum
and TDY definitions of service and compensation differ somewhat,
as do the factors used in the respective formulas. However, the
differences in the resulting benefits between the two formulas
are small for the named officers to which they apply.
Upon becoming a corporate employee, Mr. Harshman ceased
receiving credit for service under the TDY formula after having
been credited with approximately twenty years of service under
that formula. Mr. Davis actively participates in the ATI
Pension Plan.
As an alternative benefit under the ATI Pension Plan, if greater
than the benefit under the applicable Allegheny Ludlum or TDY
formula, Messrs. Harshman and Walton participate in the ATI
Pension Plan at specified, actuarially determined accrual rates
per year that do not exceed annual accrual rates permitted under
the Code. No benefits were accrued for any named officer in 2009
under this provision.
Normal retirement age under the ATI Pension Plan is age 65.
Participants can retire with immediate commencement of an
undiscounted accrued benefit at the normal retirement age or
after thirty years of service regardless of age. Participants
can retire prior to attaining age 65 or thirty years of
service with benefit payments discounted for early payment at
age 62 with at least ten years of service or, with a
greater discount, at age 55 with at least ten years of
service.
ATI Benefit
Restoration Plan
Under the non-qualified ATI Benefit Restoration Plan, the
Company accrues benefits for the named officers that restores to
eligible named officers the amounts that cannot be paid to them
under the terms of the Companys defined contribution plans
or the defined benefit plan (the ATI Pension Plan), in either
case due to the limitations set forth in the Code. All named
officers are eligible to participate in the ATI Benefit
Restoration Plan to the extent of benefits that cannot be
accrued under the defined contribution plan in which the
respective named officer participates. Messrs. Harshman and
Davis also participate in the ATI Benefit Restoration Plan to
the extent of benefits that cannot be accrued under the ATI
Pension Plan. Distributions under the ATI Benefit Restoration
Plan are available only at the times and in the same forms as
under the Retirement Savings Plan, subject to payment delays to
comply with Section 409A of the Code.
Supplemental
Pension Plan
In addition, the Company has established a Supplemental Pension
Plan that provides certain key employees of the Company and its
subsidiaries, including certain named officers (or their
beneficiaries in the event of death), with monthly payments in
the event of retirement, disability or death, equal to 50% of
monthly base salary as of the date of retirement, disability or
death. Monthly retirement benefits start following the end of
the two-month period after the later of (i) age 62, if
actual retirement occurs prior to age 62 but after
age 58 with the approval of the Board of Directors, or
(ii) the date actual retirement occurs, and generally
continue for a
118-month
period. The plan describes the events that will terminate an
employees participation in the plan. With respect to
Mr. Hassey, one year of payment is accrued for each year of
service, to a maximum of ten years. Mr. Walton is a party
to a letter agreement by which the Company agrees to pay him (or
his beneficiary) a number of monthly installments, each in the
amount of one half of his monthly base compensation measured at
the date of his retirement, equal to the number of months that
Mr. Walton remains an employee of the Company after his
65th birthday commencing after all payments due to him under the
Companys Supplemental Pension Plan have been made.
54
Nonqualified
Deferred Compensation for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
In Last FY
|
|
In Last FY
|
|
|
In Last FY
|
|
|
Distributions
|
|
|
at Last FYE
|
|
Name
|
|
($)(1)
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
L. P. Hassey
|
|
0
|
|
|
266,513
|
|
|
|
73,739
|
|
|
|
0
|
|
|
|
1,847,131
|
|
R. J. Harshman
|
|
0
|
|
|
81,434
|
|
|
|
27,124
|
|
|
|
0
|
|
|
|
680,434
|
|
J. D. Walton
|
|
0
|
|
|
81,434
|
|
|
|
35,120
|
|
|
|
0
|
|
|
|
882,484
|
|
T. L. Dunlap
|
|
0
|
|
|
45,874
|
|
|
|
15,853
|
|
|
|
0
|
|
|
|
397,793
|
|
L. D. Davis
|
|
0
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
(1) |
|
Reflects contributions made
pursuant to the defined contribution portion of the ATI Benefit
Restoration Plan. Under the terms of the plan, the participants
do not contribute; only the Company contributes to the plan on
the participants behalf. These amounts are included in the
All Other Compensation column of the Summary
Compensation Table for 2009.
|
|
(2) |
|
Aggregate earnings are calculated
using the fiscal year end balance, including current year
contributions, multiplied by the interest rate on the Fixed
Income Fund investment option in the Companys qualified
defined contribution plan. For 2009, this rate was 3.59%.
|
Employment
and Change in Control Agreements
Employment
Agreements
Mr. Hassey
In August 2003, the Company entered into an employment agreement
with L. Patrick Hassey in connection with his employment as
President and Chief Executive Officer, effective October 1,
2003. The agreement has an initial term of three years and
renews automatically each month thereafter for a successive
three-year term absent notice from one party to another of
termination. Under the terms of his employment agreement,
Mr. Hassey is paid an annual base salary of at least
$850,000. In the process of recruiting Mr. Hassey in 2003,
the Company agreed to accommodate his request that he be able to
avoid relocating his family from its Salt Lake City, Utah
residence. In order to do so, Mr. Hassey periodically uses
Company leased aircraft so that he can maintain a full schedule
with the Company. Mr. Hasseys use of Company leased
aircraft for these purposes is a provision of
Mr. Hasseys employment agreement with the Company. In
addition, under the terms of the employment agreement,
Mr. Hassey is entitled to participate in the Annual
Incentive Plan and the Companys other executive
compensation programs, including the TSRP, the KEPP and the
Supplemental Pension Plan on the terms outlined above.
Mr. Hassey is bound by a confidentiality provision, and he
is subject to non-competition and non-interference covenants
during the term of his employment and for one year thereafter.
Also, a non-disparagement provision survives for 24 months
following the termination of his employment.
The agreement also provides that:
|
|
|
if the Company terminates Mr. Hasseys employment for
reasons other than cause, which is defined in the
agreement to mean
|
|
|
|
|
(i)
|
a willful failure to perform substantially his duties after a
written demand for substantial performance is given,
|
|
|
|
|
(ii)
|
willful engagement in illegal conduct or gross
misconduct, or
|
|
|
|
|
(iii)
|
the breach of a fiduciary duty involving personal profit;
|
|
|
|
Or, if Mr. Hassey resigns for good reason,
which is defined in the agreement to mean:
|
|
|
|
|
(i)
|
the assignment of duties inconsistent with position,
|
|
|
|
|
(ii)
|
failure by the Company to pay compensation and benefits when due
other than a failure not occurring in bad faith,
|
55
|
|
|
|
(iii)
|
relocation of Company headquarters outside of Pittsburgh,
Pennsylvania or requiring substantially more business travel,
|
|
|
|
|
(iv)
|
purported termination other than as expressly permitted in the
agreement, or
|
|
|
|
|
(v)
|
failure by the Company to cause a successor corporation to adopt
and perform under the agreement;
|
then Mr. Hassey will receive all payments and obligations
accrued through the date of his termination, as well as a cash
severance payment equal to:
|
|
|
three times the sum of his then-current annual base salary plus
the amount of AIP bonus payable for the year of termination at
the greater of
actual-to-date
performance or target;
|
|
|
all accrued benefits under all qualified and nonqualified
pension, retirement and other plans in which he participates;
|
|
|
accelerated vesting of stock options and stock-based rights
which shall remain exercisable until the earlier of their
expiration or three years from the date of termination;
|
|
|
earned but not yet paid TSRP or other equity-based
awards; and
|
|
|
continued health and life insurance benefits for 36 months
following the date of termination, unless such termination or
resignation occurs after a change in control.
|
A change in control is defined to include:
|
|
|
|
(i)
|
the acquisition by an individual or entity of 20% or more of
Company voting stock,
|
|
|
|
|
(ii)
|
incumbent directors ceasing to constitute a majority of the
Board,
|
|
|
|
|
(iii)
|
approval by Company stockholders of a reorganization, merger or
consolidation,
|
|
|
|
|
(iv)
|
approval by the Company stockholders of a liquidation or sale or
disposition of 60% in value of the Companys assets, or
|
|
|
|
|
(v)
|
the occurrence of any of the preceding events within
90 days prior to the date of termination.
|
If such termination or resignation occurs within one year after
a change in control, Mr. Hassey will receive all payments
and obligations accrued through the date of his termination, as
well as a cash severance payment equal to:
|
|
|
three times the sum of his then-current annual base salary plus
the amount of AIP payable for the year at the greater of
actual-to-date
performance or target;
|
|
|
all accrued benefits under all qualified and nonqualified
pension, retirement and other plans in which he participates;
|
|
|
accelerated vesting of stock options and stock-based rights
which shall remain exercisable until the earlier of their
expiration or three years from the date of termination;
|
|
|
payments with respect to the TSRP and KEPP for the completed and
uncompleted performance measurement periods;
|
|
|
vesting of equity-based awards at the target level of
performance;
|
|
|
continued health and life insurance benefits for 36 months
following the date of termination; and
|
|
|
reimbursement for taxes, including excise taxes, assessed.
|
Mr. Walton
The Company entered an employment agreement with Jon D. Walton
in connection with the combination of Allegheny Ludlum
Corporation and Teledyne, Inc. in 1996. The initial term under
the agreement was three years, but by its terms, the agreement
renews automatically each month absent notice from one party to
the
56
other, so that the then remaining term is one year. The
agreement provides for the payment of base salary as well as for
eligibility to participate in incentive compensation, equity
compensation, employee and fringe benefit plans offered to
senior executives of the Company. The agreement generally
terminates prior to the expiration date without breach by any
party in the event of Mr. Waltons death, disability
or voluntary resignation. The Company may also terminate the
agreement for cause (defined consistently with cause
under Mr. Hasseys agreement) without breach by it. If
Mr. Walton resigns for good reason (which is defined to
include demotion, reduction in base pay or movement of corporate
headquarters), or if the Company terminates his employment for
reasons other than cause or disability, then Mr. Walton is
entitled to receive continued payment of his base salary through
the date of termination, as well as payments equal to:
|
|
|
his base pay for the remaining term of the agreement;
|
|
|
cash bonus, determined based on actual financial results;
|
|
|
service credit for the period of the remaining term of the
agreement under Company deferred compensation plans and the ATI
Benefit Restoration Plan, and full vesting under such plans;
|
|
|
reimbursement of certain legal and tax audit fees; and
|
|
|
continued participation in certain compensation and employee
benefit plans for the remainder of the term, including certain
supplemental pension benefits.
|
Mr. Walton is subject to a confidentiality covenant and is
bound by a non-competition provision during the term of his
employment.
Change in Control
Severance Agreements
The Company has entered into certain change in control severance
agreements with the named officers (other than Mr. Hassey)
and other key employees to assure the Company that it will have
the continued support of the executive and the availability of
the executives advice and counsel notwithstanding the
possibility, threat or occurrence of a change in control. The
Company entered into amended and restated change in control
severance agreements with the named officers (other than
Mr. Hassey) effective as of December 31, 2008 to
account for certain changes in the Code; no other changes to the
terms of the agreement were made.
Under the agreements, a change in control is defined
as:
|
|
|
|
(i)
|
the Companys actual knowledge that (x) an individual
or entity has acquired beneficial ownership of 20% or more of
the voting power of Company stock or (y) persons have
agreed to act together for the purpose of acquiring 20% or more
of the voting power of Company stock,
|
|
|
|
|
(ii)
|
the completion of a tender offer pursuant to which 20% or more
of the voting power of Company stock has been acquired,
|
|
|
|
|
(iii)
|
the occurrence of a successful solicitation electing or removing
50% of the members of the Board or the Board consisting less
than 51% of continuing directors, or
|
|
|
|
|
(iv)
|
the occurrence of a merger, consolidation, sale or similar
transaction.
|
In general, the agreements provide for the payment of severance
benefits if a change in control occurs, and within
24 months after the change in control either:
|
|
|
the Company terminates the executives employment with the
Company without cause, which is defined to mean a
felony conviction, breach of fiduciary duty involving personal
profit, or intentional failure to perform stated duties after
30 days notice to cure, or
|
|
|
the executive terminates employment with the Company for
good reason, which is defined to mean:
|
|
|
|
|
(i)
|
a material diminution of duties, responsibilities or status or
the assignment of duties inconsistent with position,
|
57
|
|
|
|
(ii)
|
relocation more than 35 miles from principal job location,
|
|
|
|
|
(iii)
|
reduction in annual salary or material reduction in other
compensation or benefits,
|
|
|
|
|
(iv)
|
failure by the Company to cause a successor corporation to adopt
and perform under the agreement, or
|
|
|
|
|
(v)
|
purported termination other than as expressly permitted in the
agreement.
|
In addition to amounts accrued through the date of termination,
an employee entitled to severance benefits under a change in
control agreement will be paid a lump sum cash payment within
thirty days of the date of termination equal to the sum of:
|
|
|
base salary plus annual bonus at the greater of target or the
actual level of performance achieved through the date of
termination projected through the end of the year times a
multiple (which is 3x for Messrs. Harshman and Walton and
2x for Messrs. Dunlap and Davis);
|
|
|
prorated annual incentive for the then uncompleted year measured
at the greater of target or the level of performance achieved
through the date of termination projected through the end of the
year; and
|
|
|
the value of all long term incentive awards for then uncompleted
measurement periods determined at the greater of target or
actual performance levels achieved to the date of termination
projected through the remainder of the measurement period.
|
An employee eligible for severance will also be provided:
|
|
|
the continuation of perquisites and welfare benefits for a
period (36 months for Messrs. Harshman and Walton and
24 for Messrs. Dunlap and Davis);
|
|
|
reimbursement for outplacement services up to $25,000 for
Messrs. Harshman and Walton and $15,000 for
Messrs. Dunlap and Davis; and
|
|
|
the number of years corresponding to the applicable multiples
above of credited service and full vesting under the
Companys supplemental pension plans in which the executive
participates.
|
The agreements also provide for the lifting of restrictions on
stock awarded. Also, the Company will pay the employee a
gross-up
payment for excise taxes, if necessary.
The agreements have a term of three years, which three-year term
will continue to be extended until either party gives written
notice that it no longer wants to continue to extend the term.
If a change in control occurs during the term, the agreements
will remain in effect for the longer of three years or until all
obligations of the Company under the agreements have been
fulfilled.
In 2009, the Personnel and Compensation Committee reviewed the
then change in control valuation, as well as the purposes and
effects of the agreements, and determined that it is in the
Companys best interests to retain the change in control
agreements on their terms and conditions as amended.
Potential
Payments Upon Termination or Change in Control
The tables below reflect estimates of the amount of compensation
in addition to the amounts shown in the compensation tables to
each of the named officers of the Company in the event of
termination of such executives employment. The amount of
enhanced compensation payable to each named officer upon
voluntary termination, retirement, involuntary not for cause
termination, for cause termination, involuntary or good reason
termination within 24 months following a change in control
and in the event of disability or death of the executive is
shown below. The amounts shown assume that such termination was
effective as of December 31, 2009, and are estimates of the
amounts which would be paid out to the executives upon their
termination. On December 31, 2009, the closing price of
Company Common Stock on the NYSE was $44.77. The actual amounts
to be paid out can only be determined at the time of such
executives separation from the Company.
58
For purposes of the tables, calculations are based on the
greater of the target award or the value earned for actual
performance against the preset performance goals thorough the
assumed date of termination. The actual performance to the
assumed date of termination is projected through the remainder
of the uncompleted performance measurement periods. Further, the
tables show annual bonus amounts at the actual level of
performance for 2009. The actual amounts to be paid out can only
be determined at the time of such executives separation
from the Company.
Payments Made
Upon Termination
Regardless of the manner in which a named officers
employment terminates, he may be entitled to receive amounts
earned during his term of employment. Such amounts include:
|
|
|
non-equity incentive compensation earned during the fiscal year;
|
|
|
amounts contributed under the savings portion of the Retirement
Savings Plan and the Benefit Restoration Plan;
|
|
|
unused vacation pay; and
|
|
|
amounts accrued and vested through the ATI Pension Plan and
Supplemental Pension Plan.
|
Payments Made
Upon Retirement
In the event of the retirement of a named officer, in addition
to the items identified above, such officer will be entitled to
(subject to the Companys consent for certain amounts):
|
|
|
retain any outstanding stock options for the remainder of the
outstanding ten-year term;
|
|
|
receive a prorated share of each outstanding TSRP award upon the
completion of such cycle when, if and to the extent such award
is earned during the applicable performance measurement period;
|
|
|
receive all outstanding shares of time-vested
performance/restricted stock when the restrictions on such
shares lapse upon the passage of time or the achievement of the
applicable performance criteria;
|
|
|
receive all outstanding shares of performance-based
performance/restricted stock when, if and to the extent that
such award is earned during the applicable performance
measurement period;
|
|
|
receive that portion of the outstanding KEPP awards that were
earned at the time of retirement and a prorated share of the
remaining portion of each outstanding KEPP award;
|
|
|
receive payments under the Supplemental Pension Plan, beginning
two months after retirement, subject to Section 409A of the
Internal Revenue Code;
|
|
|
receive health and welfare benefits until age 65 and
receive health and welfare benefits for dependants, as
applicable, subject to the limitations applicable to all
salaried employees; and
|
|
|
receive life insurance benefits until death.
|
Consent of the Company is required for payments of the TSRP,
performance/restricted stock and KEPP awards described above
upon retirement.
Payments Made
Upon Death or Disability
In the event of the death or disability of a named officer, in
addition to the benefits listed under the headings
Payments Made Upon Termination and Payments
Made Upon Retirement above, the named officer will receive
benefits under the Companys disability plan or payments
under the Companys life insurance plan, as appropriate,
each as generally available to all salaried employees. In
addition, all outstanding performance/restricted share awards
vest on the death of a named officer.
59
Payments Made
Upon a Change in Control
As described in the Employment and Change in Control
Agreements section, the Company is a party to an
employment agreement with Mr. Hassey and a change in
control severance agreement with each other named officer that
provides the named officer with payments in the event his
employment is terminated by the Company for reasons other than
cause or by the named officer for good reason (defined to
include diminishment of pay, benefits, title or job
responsibilities or transfer from the home office) within
24 months after a change in control. See the information
under the caption Employment and Change in Control
Agreements for definitions. The tables below illustrate
the amount of payments due in various circumstances.
As noted, the column Involuntary or Good Reason
Termination (w/in 24 Months of a Change in Control)
assumes that there was a change in control at the
December 31, 2009 closing price of $44.77 per share and all
of the named officers had a triggering event on
December 31, 2009 and all cash amounts due, all deferred
compensation enhancements and all potential benefit payments
were to be paid in a single lump sum. The aggregate payments to
the named officers would be approximately 1.3% of the indicated
transaction value of $4.4 billion, which represents the
Companys approximate equity market capitalization value at
December 31, 2009.
|
|
L.
|
Patrick Hassey ($
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
7,507
|
|
|
|
|
0
|
|
|
|
|
7,507
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
4,564
|
|
|
|
|
4,564
|
|
|
|
|
0
|
|
|
|
|
4,564
|
|
|
|
|
4,564
|
|
|
|
|
4,564
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
9,691
|
|
|
|
|
9,691
|
|
|
|
|
0
|
|
|
|
|
9,691
|
|
|
|
|
9,691
|
|
|
|
|
9,691
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,820
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified defined benefit plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
45
|
|
|
|
|
0
|
|
|
|
|
45
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Life Insurance Proceeds
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Excise Tax & Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Outplacement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Supplemental Pension Plan:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Total
|
|
|
|
0
|
|
|
|
|
14,255
|
|
|
|
|
21,807
|
|
|
|
|
0
|
|
|
|
|
23,627
|
|
|
|
|
14,255
|
|
|
|
|
14,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For 12 months after termination, Mr. Hassey is
obligated to refrain from competing with the Company and
soliciting employees or customers of the Company, and for
24 months after termination, Mr. Hassey is obligated
to refrain from disparaging the Company.
60
Richard J. Harshman ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,424
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
1,342
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,342
|
|
|
|
|
1,342
|
|
|
|
|
1,342
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
2,849
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,849
|
|
|
|
|
2,849
|
|
|
|
|
2,849
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
856
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
135
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified defined benefit plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
486
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
45
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Life Insurance Proceeds
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Excise Tax & Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Outplacement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
25
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Supplemental Pension Plan:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,104
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Total
|
|
|
|
0
|
|
|
|
|
4,191
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
11,266
|
|
|
|
|
4,191
|
|
|
|
|
4,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon D. Walton ($
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
856
|
|
|
|
|
0
|
|
|
|
|
3,424
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
1,342
|
|
|
|
|
1,342
|
|
|
|
|
0
|
|
|
|
|
1,342
|
|
|
|
|
1,342
|
|
|
|
|
1,342
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
2,849
|
|
|
|
|
2,849
|
|
|
|
|
0
|
|
|
|
|
2,849
|
|
|
|
|
2,849
|
|
|
|
|
2,849
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
856
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
83
|
|
|
|
|
0
|
|
|
|
|
135
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified defined benefit plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
15
|
|
|
|
|
0
|
|
|
|
|
45
|
|
|
|
&n |